Public Bill Committee

[Joan Walley in the Chair]
BR 01 Transparency International UK

Joan Walley: Before the adjournment, my co-Chair, Sir Nicholas Winterton, made it clear that the Committee Room would be locked and that papers could be left here. I have, however, been made aware that papers have been removed. We will endeavour to discover what has happened and ensure that it does not happen again.

Clause 6

Bribery of foreign public officials

Amendment proposed (this day): 11, in clause 6, page 4, line 12, at end insert
(3A) It shall be a defence if P reasonably believed at the time of the alleged offence that F or the third party to whom the financial or other advantage was given was required or permitted to accept it under the domestic law of the jurisdiction in which F or the third party operates..(Mr. Djanogly.)

Question again proposed, That the amendment be made.

Claire Ward: It is a great pleasure to serve under your chairmanship, Ms Walley. I believe that this is your first sitting as Chair of a Public Bill Committee, so congratulations. I hope that we can make it an interesting and enjoyable experience for you.
Before the lunch break, we were discussing amendment 11 in relation to the clause 6 offence of bribing a foreign public official. I explained that, although the Law Commission originally proposed a defence similar to that proposed by the amendment, we carefully considered representations and took the view that it was important that companies engaging in activities overseas should not be able to rely on a defence of ignorance of the law. That would not be acceptable. In the exceptional case of a genuine mistake where an individual in unfamiliar surroundings was faced with plausible demands that in fact amounted to a low-level bribe, it would be for prosecutors to decide whether it was in the public interest to pursue a prosecution.
The offence is intended to send a powerful message that those involved in international business should think twice before offering, promising or giving payments or other advantages to foreign public officials. The introduction of a reasonable belief defence would detract from that powerful message and undermine the policy aims of the offence to combat foreign bribery. The Joint Committee agreed with the Governments decision to reject the reasonable belief defence and commented that the proposed offence
represents an important step in putting the United Kingdoms compliance with its international obligations beyond doubt.
I should also like to clarify some of the other issues raised during this mornings debate. The hon. Member for Huntingdon asked why we are not following the preferences expressed by the Director of Public Prosecutions in his evidence to the Joint Committee. Of course, we value the views of the DPP, as we do those of all stakeholders and parties that are interested in the issue. We took those views into account and considered them carefully, but we have to achieve a balance and make a judgment. In doing so, we believe that we have come to the right conclusion. That does not mean, however, that we do not value the contributions that have been made to the debate.
I was also asked about the publication of guidance. For clarification, I assure the Committee and the hon. Gentleman that, as is usual practice, we will make guidance available on the Bills contents as part of an explanatory circular, which will cover the clause 6 offence, as well as other aspects of the Bill. The guidance to which clause 9 refers relates to the offence under clause 7 and the procedures that commercial organisations can put in place to prevent bribery by persons associated with them. That guidance will therefore touch on the offence in clause 6 only to the extent that it is relevant to the commission of an offence under clause 7 and the procedures that a commercial organisation can put in place to prevent bribery by those associated with it.
For those reasons, I invite the hon. Gentleman to withdraw his amendment.

Jonathan Djanogly: First, I wish to address the remarks, which I slightly blurringly remember, of the hon. Member for Cambridge. His core point was that, in practice, the amendment is not a problem in so far as it will not hinder a prosecution. To that extent I agree that it is not a problem to mount the prosecution. The clause is very clearly drafted and there will be very little wriggle room; I am not disputing that. The concern is whether it will be applied in a way that will stop business operating. I was grateful to hear from the Under-Secretary that the clarification of the guidance will accompany clause 6.

David Howarth: I think I now remember what my point was. It was actually in the opposite direction; the situation where a company or person accused of bribery is said to have got the foreign law wrong, which I think was the case that the hon. Gentleman was raising. The issue then is: under what conditions is that organisation or person guilty of bribery? My point was simply this: it would be for the prosecution to prove what the foreign law was, as a fact. The burden of proof would be on the prosecution to prove beyond reasonable doubt that the foreign law was not as the defendant thought it was. That is the reason why I thought that many of the problems that he raised would not be problems for the defendant, so much as problems for the prosecution.

Jonathan Djanogly: I thank the hon. Gentleman for that clarification. We discussed that this morning, certainly to the extent that the company seeking the advice receives advice overseas on the written law of that country. The concern is that if that advice is wrong, they still may be liable for prosecution. That is the potential issue and concern.
The Under-Secretary spoke about the amendment undermining the policy aims of the Bill. That is a pretty broad-brush statement and I do not think that that can necessarily be applied. As to where we have reached on this for the moment, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Oliver Heald: I just wanted to mention the CBI position. The CBI briefing to the Committee expressed concerns about clause 6 generally. Of course, it is right to have proper protection against bribery, corruption and extortion. It is in the British interest, as a law-abiding country and law-abiding trader, to have that situation. It is a bad thing for Britain if other countries are able to bribe officials or act in an improper way when we are trying to trade ethically.
In the briefing, the CBI says that it strongly supports the Governments objectives, as I do. It is important to recollect that as long ago as 1995, the Committee on Standards in Public Life said that it was important to codify our law in the field of corruption and bribery, and that that is a reputational issue for the UK. However, it is also important to take account of the concerns of one of our major large business organisations, when it says that it is very concerned that legitimate business promotional expenditure and proportionate use of corporate hospitality will be caught by clause 6, because the offence does not adequately incorporate a concept of dishonesty or impropriety.
It would be useful to hear the Under-Secretarys thoughts on the CBIs concerns. The CBI went on to raise the idea that the notion of corruption and dishonesty or impropriety is something that is recognised internationally. It is a mistake for a new offence of this sort, involving the bribery of foreign public officials, not to have that concept at its centre. The Law Commission and the Joint Committee have produced a workable draft Bill, but the point discussed this morning is important and the CBIs concern needs to be addressed.
The CBI says:
It cannot be fair to criminalise honest company behaviour. A response that relies on prosecutorial discretion
is not adequate. It makes the point that there are implications:
Businesses either have to commit to no promotional expenditure, which is clearly unsustainable, or openly condone criminal acts by their staff.
They do not want to be in that position. The CBI says that any proper promotional expenditure should be made without the fear that it would only be proper under prosecutorial discretion. It raises the question of section 328 of the Proceeds of Crime Act 2002.
I am interested to see whether the Minister wants to comment more generally about the clause, as it is worth responding when a large business organisation raises such concerns.

David Howarth: I received the same briefing as the hon. Gentleman but did not follow his point about section 328 of the Proceeds of Crime Act. That is a very difficult Act to construe. That section is about money-laundering. My understanding is that the underlying offences have to be shown; that there cannot be a money-laundering requirement or offence where there is no underlying offence for the proceeds provisions to latch on to.
In general, in the proceeds of crime area, it is only in a situation where somebody thinks someone else is doing something bad that he or she has to make a submission to the Serious Organised Crime Agency. The concern raised by the CBI does not seem to be in line with my understanding of how the system works. Perhaps the hon. Gentleman understands it better than I do.

Oliver Heald: I would not be so outrageously arrogant as to make that suggestion. I did not read the sentence fully. I thought a little shorthand was probably adequate for the hon. Gentleman, given his detailed knowledge of the law. The point that I and the CBI have been making is that
any proper promotional expenditure would, irrespective of the prosecutorial discretion under the Bill, be a breach of section 328, unless companies obtain consent
to make each payment from SOCA. The CBI believes that is an unworkable proposition.

David Howarth: That is what I do not understand, because I do not think it is a breach of section 328, unless it is already illegal in some other way. That was the point I was trying to make.

Claire Ward: The offence is clear and there are good reasons why we have incorporated it into the proposed legislation. We believe that it sends a strong message about what is acceptable conduct. It requires the prosecution to prove that the person offering the advantage intended to influence the official in his or her official capacity, and intended to obtain or retain business or an advantage in the conduct of business.
The offence is deliberately structured so that, where an advantage is offered, it will only fall outside the offence where the public official is permitted or required by the written law applicable to the official to be influenced by the advantage. That avoids any question of what is customary in the foreign jurisdiction concerned. Where any doubt exists, prosecutorial discretion will remain an important safeguard against legitimate activities being penalised.
The hon. Member for

Oliver Heald: North-East Hertfordshire.

Claire Ward: I should know that well but always get the precise description wrong. I know the areas it covers, though. The hon. Member for North-East Hertfordshire raises the concerns of the CBI. The CBI is one of the organisations with which we have had ongoing discussions about the Bill. We continue to have discussions to ensure that in practice businesses are able to comply in due course with the offences under the proposed legislation.
The hon. Gentleman raises the prospect of promotional expenditure or other forms of hospitality being caught under clause 6. We all know that for many companies, promotional expenditure is an important part of modern business practice, and the Government do not seek to restrict appropriate expenditure of that kind. Whether promotional expenditure will amount to an offence under the clause will depend on the facts.
It is possible that clause 6 would catch some promotional expenditure. When such expenditure is designed to explain, and to inform potential buyers about, a commercial organisations products, it would not necessarily involve the transfer of any advantages as mentioned in clause 6. However, if benefits that might be regarded as hospitality were included within promotional expenditure, such expenditure could be an offence under the clause if the local law did not expressly permit or require the receipt of such benefits by officials. Whether such a case would proceed would be a matter of prosecutorial discretion.
We believe that in marginal cases of bribery such as those that I have outlined, prosecutors would try to provide the right balance when determining whether it would be in the public interest to proceed with a prosecution. It is not our intention to drag a series of companies through the courts on the basis of promotional expenditure that does not seek simply to bribe a public official.

Oliver Heald: Suppose that a company is trying to break into a new market in a country that is perhaps not brilliantly familiar to Britain, or vice versait is good to encourage businesses to do that but it is not easy to achieve. If the product being sold was something uniquely British that we would understand fully but that would not be understood elsewhere, the business might want to bring an official of a company, and perhaps a local planning official, over to this country to see what its plant looks like and what it produces for the purpose of information. In the process, the officials might visit London and perhaps take in a show. In such circumstances, would that be a bribe?

Claire Ward: We would have to look at the extent of the hospitality and the purpose for which the business was undertaking those activities. The prosecutors would consider the facts to determine whether to proceed with a prosecution. Providing information about a business and promoting it to ensure that it has the opportunity to compete on equal terms with other businesses is different from providing a foreign public official, his family and various others with a five-star holiday and other additional benefits not specifically related to the promotional work of the business. The case would be about the facts, and then it would be for the prosecution to determine whether it was in the public interest to proceed with prosecution.

Jonathan Djanogly: The Under-Secretarys reply has sparked my memory of our exchanges on facilitation payments during which, if I recall rightly, she questioned me about whether any facilitation payment whatsoever was bribery. It was suggested that the fact that I could see certain circumstances in which there should be an exceptionas has arisen in the United Stateswas basically outside the remit of the Bill, and she was somewhat on her high horse on the matter. Given her comments about hospitality, it seems to me that slipping a small note into a passport as a facilitation payment would be out of the question but thatdepending on the circumstances, as she saidtaking in a show in London might be acceptable. That not entirely consistent approach makes me think that there is something more to this than what she has been saying.

Oliver Heald: In general I welcome the Bill and think that it is well structured, but it seems to drag in some low-level activity and elements of business practice that one would not traditionally have described as corruption or bribery, such as showing the client the product, where it is made and perhaps including some hospitality. That is, I would have thought, fairly normal business practice when trying to break into a new market overseas. If someone working for a company is worrying all the time that if they bring people over to show them the product and the plant and then go out for a meal, they might be in trouble with the Minister and perhaps be prosecuted, it will cause them to pause for thought.
It is clearly a good thing for serious incidents to be dealt with by the courts, and it is good that we have a new Bill, but I am worried that low-level activity that would not normally be thought to be criminal in any way will be criminalised. The CBI is also worried, and I normally take it seriously because it is the big business organisation. I hope that the Minister will think again. If we are going to have an export-led recovery, is this approach wise?

Robert Syms: In the example that my hon. Friend cited, showing people a companys wares would be sensible business. If those people happened to see part of British culture too, I do not think that there would be a problem. However, as the onus is on the prosecution authorities, if I were a French company and knew that my competitor had brought three people over to look at its plant, I would simply write to the prosecutors and say that the competitor was being corrupt. Some companies are willing to do such things when they are in competition. One or two of our airlines have had some quite vicious fights. The problem is the focus on the prosecuting authorities. We might get complaints that are an attempt to disrupt business.

Oliver Heald: I had not thought that there might be a vindictive competitor, but I suppose that is possible. The alternative danger is that the French operator decides that it will do even better and takes those people to the south of France, and then we get into heavy expenditure. It is important that there are limits but, at the same time, I worry about the way in which the proposal is pitched.
During this mornings sitting, we examined provisions that contained nothing about behaviour being corruption or bribery in terms of intent, and now we are looking at a provision that has implications for exports when we want to stop bribery and corruption, but we do not want to stop legitimate business expenditure on the promotion of products.

John Howell: During the late 90s I did a lot of work alongside UK Trade & Investment and its predecessor organisations to encourage exports, particularly to the newly opening central and eastern European countries from where very few people had come to the UK. It was the advice of successive Governments that when people were brought over to look at the product, that should also be an opportunity for them to see the UK and get a feeling for British culture. That was sound advice because of the impact of the practice on promoting UK plc. Does my hon. Friend agree that the Bill will put at risk precisely that sort of good advice?

Oliver Heald: Yes. Part of the sales pitch for those missions, which were often led by Ministers, was saying, If you dont understand how this service or product operates, come and have a look. People would then come here. I believe that that still happens, and I would not be at all surprised if Ministers in the Department for Business, Innovation and Skills and the Foreign and Commonwealth Office were giving the same advice at this very moment. However, the CBI, which is the business organisation that should be seen as very important to the whole process, is saying, Yes, but youre making promotional activities difficult for us.

Jeremy Wright: Does my hon. Friend agree that another difficultyperhaps it is a two-fold difficultyis that our embassies provide a great deal of hospitality and also support the activities of businessmen in attracting trade to the UK, as do our armed forces. For example, there are often cocktail parties on the decks of navel ships. Such issues are worth considering in this context.

Oliver Heald: Of course UK plc, as it is called, goes into bat to get our products sold internationally. It carries out its promotion legitimately, but that involves expenditure and, from time to time, not only company officials but Government officials. In a lot of countries, the view of the local official determines whether somebody is allowed to build a factory and make products, or even to import a quantity of material. In some countries, it might even be a political party figure, as the local official and the party representative, who decides what imports may take place.
It is easy to see that persuading a client that a company has a good product and showing them how it works involves promotional expense and exposure to officials. We want an assurance from the Under-Secretary that people carrying out such activities will not fall foul of the law. It should not be just a matter of begging the prosecutor not to prosecute. If people behave legitimately, the fact that they are not guilty should be a right. If the Under-Secretary cannot give that assurance, and it is simply a matter of saying, Oh well, I hope that the head of the British Transport Police, a prosecutions department, the Director of Public Prosecutions or a Crown prosecutor in some place will let me off, I do not think that our business men will be reassured.

Peter Kilfoyle: I am sure that we are all extremely pleased to hear Her Majestys loyal Opposition defending companies that could end up under the cosh of the Bills provisions. Whether it is facilitation payments, or that a companys efforts to promote its cause in some exotic place are misconstrued

Oliver Heald: Will the hon. Gentleman give way?

Peter Kilfoyle: I have not got to my point yet. I was particularly taken with the Under-Secretarys comment that she had consulted the CBI. Obviously, we are all gratified that there is such a doughty defender of civil and human rights in this country, never mind elsewhere. During her consultations, did she consult SOCA to determine its view on the Bill, and especially on clause 6?

Jeremy Wright: May I take this opportunity to welcome you to the Chair, Ms Walley?
I shall simple raise one issue that is, I think, relevant to clause 6. It has been raised many times by the Under-Secretary in response to points made by Conservative Members and to amendments tabled by my hon. Friend the Member for Huntingdon. The issue is prosecutorial discretion, and it will arise regularly, especially when we are dealing with the bribery of foreign and public officials, so it is sensible to explore it a little now.
Three things concern me. First, I am concerned about clarity. As other hon. Members on the Committee have observed, we are creating new law, which, in some ways, is radical. Business and industry in this country will have to get used to it very quickly or find themselves with the possibility of a criminal conviction. The one thing I am sure business and industry will require of us is a good deal of clarity regarding what law they are expected to comply with. We will go on, of course, to talk about guidance. The Minister has already referred to that, and it will be a large part, one hopes, of the clarity that they will seek. However, what undermines clarity is the suggestion that the answer to every potential problem with the Bill is that there is no need to worry because the prosecutors have a discretion and might decide not to prosecute at all.
Most business people in this country will legitimately be concerned, thinking Thats all very well, but how do I know whether they will exercise discretion in my favour before I decide to do whatever I decide to do? That is why we, as best practice, seek good, sensible, clear laws, whenever they can be made.

Robert Syms: I was on the Finance Bill Committee, and Her Majestys Revenue and Customs has a system by which if some kind of tax avoidance scheme is wanted it is possible to explain what it is, and it either approves it in advance or does not approve it. Clearly, if a company is doing business and wants to entertain, or bring people in for training, or whatever, there should, if one is to go down the route in question, be a way to ask whether that is appropriate or not. We all know that there are some grey areas, but that is the problem. If it is a matter for the prosecuting authorities, will it be necessary to write to the Director of Public Prosecutions every time a company wants to bring people in and entertain them in some modest way?

Jeremy Wright: My hon. Friend makes a reasonable point. We can go further than that, in fact. The situation will undoubtedly arise in which people with a huge variety of businesses and types of business interest, and who do business in different parts of the world, will want such advice. They may also, while we are about it, seek advice from the same source as to what exactly the local law is in the places in questiondealing with the point that was raised earlier. I think that that is a sensible argument.
The second point that worries me is linked to the first, and it concerns consistency. If there is to be wide prosecutorial discretion there is a danger that different decisions made in different cases will not give a clear and consistent idea of law enforcement in this context. It is important that if we are to give British industry the necessary signalthe signal that the Under-Secretary has today clearly outlined, with which the entire Committee agrees: that this country does not tolerate bribery and that those who engage in it will be properly punishedthere must be not only clarity but consistency in the minds of all the relevant businesses about what will happen to them if they engage in certain activities. If, as I have said, the Under-Secretarys answer to every proposed defence or clarification on the part of my hon. Friend the Member for Huntingdon, is You dont need to worry, because the prosecutors have discretion, we shall not necessarily get consistency.
The third point is my response to the Under-Secretarys argument about setting an example not just for British industry but globally. She has referred to the Bill as a global gold standard, and I am sure that we would all want that. The danger is that we tend to undermine the gold standard if there is a good deal more flexibility in the implementation of the law than appears from the statute. If, again, the answer to every question seeking clarification and every question about defences is, You dont need to worry because the prosecutor has a discretion, how does that look to those to whom we say, the Bill is a global gold standard?
The answer is that there is a danger that people elsewhere in the worldthe OECD and otherswill say, I understand the Governments intent; they have spoken many fine words about bribery and the law looks good, but it seems from listening to the Under-Secretary in Committee that there is an awful lot of wriggle room, because prosecutors might be able to say in any given case, We have a discretion and perhaps on this occasion we will choose not to prosecute.
The moral authority that we have as a result of talking about a global gold standard, as we should all want to do, is somewhat undermined if we do not have clarity, consistency and an absence of wriggle room; that will undermine the principle. That is the danger we need to consider, and I raise it because a pattern seems to be emerging. The Under-Secretary responds in the way I have described to all our amendments. This is a live issue for the stand part debate and I hope she can deal with the point directly.

Jonathan Djanogly: Listening to my hon. Friends and to the Under-Secretarys remarks so far, I am starting to wonder how apprised she is of the needs of business in the context of the Billand perhaps in other contexts. Although everyone wants to stamp out bribery, I acknowledge the rather poor attempt we have been making at it over recent years. However, the rationale of a Justice Minister is, of course, slightly different from that of, for example, a BIS Minister. Given some of the Under-Secretarys comments, I am not sure how absolutely aware she is of the realities of international business. The days when I expected any joined-up thinking from the current Administration are long gone, but will she explain to what extent she has discussed these clauses, the Bill generally and the CBIs concerns, as expressed by my hon. Friend the Member for North-East Hertfordshire, with her colleagues in BIS?

Claire Ward: How interesting! One moment we hear the Opposition call for flexibility in legislation to make sure that we respond to the needs of businesses, and in the next breath they are telling us that we cannot afford to have any wriggle room. It will be interesting to see where we get to with this debate.

Jeremy Wright: Will the Under-Secretary give way?

Claire Ward: Perhaps I can proceed a little further first. The reality is that the clause needs to be put into context. First, the measure concerns foreign public officials and relates to where such officials are involved. Bringing other companies from other parts of the world over is not appropriate or important in this respect; it relates to the transfer of an advantage to the individual. That may not be the case if we are talking simply about promotional expenditure and whether that foreign public official is getting an advantage as a result of promotional expenditure. Perhaps where hospitality is involved and the local law does not permit it, the prosecuting authorities are quite capable of distinguishing between what is excessive conduct and what is routine.
The Bill is supported across government and has the support of my colleagues in BIS. They have attended events, meetings and discussions with business as part of the discussion on the Bill and the clauses. They are well aware of the implications of the clauses and we make absolutely no apology for setting a high standarda gold standard. We are sending out a very strong message to businesses that bribery is not acceptable in this country and it is certainly not acceptable in respect of foreign officials.

Jeremy Wright: Based on what the Under-Secretary has just said and her somewhat over-broad opening statement, there is a fundamental misunderstanding. There is a difference between applying the needs of business and being willing to listen and be flexible when the law is being drawn up, and doing so once the law is in existence. When the law is in existence, what business needs above all else is clarity, so that those involved know where they stand. It is not an answer to the question of whether the needs of business have been thought about to say, We will think about the needs of business at the level of prosecutorial discretion. That is the point we have been making, and that is what the Under-Secretary needs to address.

Claire Ward: I am already saying to the hon. Gentleman and his colleagues that business is not an after-thought in this matter. Business has been involved in the discussions on the Bill for a considerable time, and it continues to be part of our discussions, particularly in respect of guidance for clause 7. We welcome the opportunity to discuss the measure with business. There are already a whole range of appropriate guidance and standard procedures in place within companies, because they deal with international business. Those companies operate effectively and appropriately. Of course, we recognise that hospitality can and sometimes does form a very important part of international businesses. However, it is clear that there are circumstances in which such expenditure could amount to a bribe, if it is excessive and designed to influence the foreign public official, irrespective of the merits of what might be the companys promotional expenditure. On that basis, it is appropriate that the prosecuting authorities should have an opportunity to consider such matters.

Oliver Heald: Obviously, the purpose of a promotional activity, such as bringing a foreign official who will have a say in whether the contract is awarded to a company to see the plant and the product, is to influence his decision, but it is not an improper motive. A lot of what will be done will be to show him the reality of the product and the plant. There is no element of corrupt intent. However, there is a worry that in such a situation the company might be prosecuted.
First, does the Under-Secretary accept the proposition that often in businessexporting and so onit is necessary to talk to officials as well as companies to get the requisite permissions to export? Secondly, does she accept that it is proper to show the official, if necessary, the details of how the business works here, although the expenditure involved in bringing the official to Britain would arguably be to his advantagehe may never have visited beforeand the visit is designed to influence him by showing him what the real product is like and educating him about it, and so on?

Joan Walley: Order. This is a long intervention; I hope it is coming to an end shortly.

Oliver Heald: It is over.

Claire Ward: I think I understand the point the hon. Gentleman is trying to make, but I do not see the advantage to the foreign public official in those circumstances. As the hon. Gentleman describes it, the company is promoting its business in respect of a potential contract. The offence is in respect of the foreign public official. I am not clear where he thinks the advantage to the foreign public official might be.

Oliver Heald: If he is brought here and put up in a hotel while visiting the plant and the various products, for example.

Claire Ward: It then becomes a matter of degree, surely. It is a question of the foreign public official seeing the circumstances in which the business operates as a legitimate business activity, as distinct from an opportunity for the foreign public official to have a three-week stay in a five-star hotel with his family. The hon. Gentleman may be alluding to a distinction between the two sets of circumstances. That is the point at which the prosecuting authorities will consider what the intention was behind what people were trying to do, and what they were seeking to achieve.

David Howarth: For the hon. Gentlemans scenario to work, the foreign official has to be in a position where they are neither permitted nor required to go on such trips or to accept hospitality. The hon. Gentleman is piling unlikelihood on unlikelihood.

Claire Ward: Hence our saying that we set a high standard for business. We make it clear that it is for businesses to consider what they are doing and whether such activities would amount to bribery of a foreign public official. We set that high standard because it is appropriate to do so to send a clear message that it is not acceptable for bribery to take place around the world or in this country, as mentioned under other clauses.
In most cases, businesses have more sense than the hon. Member for North-East Hertfordshire suggests they might have in respect of understanding the difference between providing promotional activities and information in the course of their business, and seeking to bribe a foreign public official.

Oliver Heald: I understand that the Under-Secretary is saying, You, Heald of North-East Hertfordshire, have come up with this idea. If that were so, it would be a fair point. But I am not saying that: the CBI, which represents the big businesses of Britain, is saying that, and it is concerned. The hon. Member for Cambridge might be right to say that companies do enough research to be absolutely clear about what a foreign official can do when making overseas visits, but it concerns me that the CBI is worried that legitimate business promotion expenditure could be caught.

Claire Ward: The CBI is perfectly entitled to express concerns on behalf of its members. We seek to explain circumstances in which there might be an issue but, ultimately, the Bill cannot provide every type and detail of corporate hospitality or promotional expenditure that would fall one side of the line or the other. The matter is one for prosecutorial discretion. I expect that businesses are more than capable of determining what is appropriate behaviour to ensure that they are not engaging in bribery.

Jonathan Djanogly: Has the Under-Secretary discussed the clause, as asked earlier, with her counterparts in the Department for Business, Innovation and Skills?

Claire Ward: As I have already said, representatives from BIS have been part of our discussions. The matter has had broad support across the whole of government, which includes what is related to business.

Jonathan Djanogly: I do not think that the Under-Secretary understood my question, which was whether she had met Ministers in BIS to discuss the implications of the clause for British business.

Claire Ward: My colleagues in BIS have given their support to the Bill.
I have covered the issues raised in clause 6 extensively. I encourage the Committee to approve clause stand part.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Failure of commercial organisations to prevent bribery

Jonathan Djanogly: I beg to move amendment 12, in clause 7, page 5, line 8, leave out adequate and insert reasonable.
The amendment seeks to replace the current defence of adequate procedures and tighten the language to provide business with a practical and workable defence that can easily be assessed by prosecutors and jurors. Our hope in amending the clause is to save costs for business and for prosecutors by providing a more readily understandable defence.
Clause 7 creates the offence of commercial organisations failure to prevent bribery and, as drafted, it is a strict liability offence, a successful conviction for which could lead to an unlimited fine. The Compact Oxford English Dictionary defines adequate as satisfactory or acceptable. The first recourse of business owners or legal practitioners when putting in place or accessing anti-bribery guidelines will be the plain English meaning of the words chosen by Parliament when drafting the Bill. As it stands, I must confess, that I am not sure about a formulation that requires such guidelines to be only satisfactory or acceptable.
Such a definition gives rise to inherent inconsistencies or concerns. First, to whom are the guidelines satisfactory or acceptable? If a commercial entity has to rely on the subsection as a defence against alleged bribery, surely the measures in place to prevent bribery could not have been adequate. If the measures had been adequate, the bribery would not have occurred in the first place.
Lord Henley, in the other place, summarised the problem quite well:
Who is to judge what is adequate and what is not? If a company has stringent rules in place, checks on its employees, has transparent accounting and so on, but a determined associate of that company still manages to bribe another, were those procedures adequate? They did not, after all, prevent the offence of bribery taking place. What about a company with weak procedures in place which nevertheless managed, perhaps more by chance than anything else, to stop an embryonic plan to commit bribery?[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC45.]
My amendment seeks to change the wording from adequate to reasonable. The Compact Oxford English Dictionary defines reasonable as fair and sensible. As much as is appropriate or fair. I trust that the Government do not seek to impose a blanket requirement for all businesses, from the smallest family business right up to the global giant corporate monolith, to follow the same procedures? Those concepts of fair and appropriate have not been watchwords of this Government in imposing regulations on businesses.

David Howarth: Until that point, I was following what the hon. Gentleman was saying. It occurs to me that although there are some exceptions, when the courts discuss the meaning of reasonableness in general law, they do not take into account the resources available to the defendant. An overall cost-benefit analysis applies the objective to everyone; it is not done according to the defendants wealth or ability to make payments.

Jonathan Djanogly: No, but in a corporate sense the hon. Gentleman surely appreciates that what is reasonable for a small family business may not be so for a huge company, with its procedures and HR departments. That is common sense.

David Howarth: The hon. Gentleman is a lawyer, like me, and knows that the law is not necessarily common sense. I am pointing out to him how the courts often interpret reasonable.

Jonathan Djanogly: As I have seen in practice, and as the hon. Gentleman has said, the consideration of reasonable will involve a review of the various issues involved in the case.

Jeremy Wright: On the argument that my hon. Friend is having with the hon. Member for Cambridge, would it assist if we looked at the rest of subsection (2)? If my hon. Friends amendment were to be adopted, that subsection would read:
to prove that C had in place reasonable procedures designed to prevent persons associated with C from undertaking such conduct.
In other words, in a smaller enterprise there would be fewer people than in a large organisation, and in that context reasonable may be different.

Jonathan Djanogly: I thank my hon. Friend for pointing that outa good spot. It is often forgotten that the burden of regulation is disproportionately carried by smaller businesses. That is the reality of corporate life, and we need to move away from it. It is often small businesses that are hit hardest by the global economic problems and face the steepest uphill road back to prosperity, and that is why we believe that amending the wording to reasonable has a threefold advantage. First, by its very nature, the term imports objectivity; secondly, courts and jurors are well acquainted with the concept of reasonableness and the so-called reasonable man test; and, thirdly, it provides for a proportionality of assessment that is otherwise absent. Reasonable procedures can be considered in the light of the circumstances and facts of the case giving rise to the alleged offence, for instance the size of the company, its sphere of operations from both a geographical and a product perspective, and its history of offences. I would be interested to hear from the Minister examples of where adequacy has been used in statute. That might make an interesting comparison.
We agree in principle with the need for corporate liability in the Bill, but our concern is to strike the right balance. There was near unanimous agreement in the evidence presented to the Joint Committee that the meaning of adequate procedures would require amplification through guidance. The OECD was anxious that there should be greater clarity over what it meant:
There is a case for saying that, even if it reaches the statute book, this clause should not be brought into force until some work has been done with the CBI, other business representatives, anti-corruption experts, and others, to hammer out some basic standards and procedures.

Oliver Heald: Is my hon. Friend suggesting that that there needs to be a handbook or guide that explains what adequate procedures would be, perhaps saying what they would be for small, medium and large enterprise in certain scenarioswhether they were big exporters, for example?

Jonathan Djanogly: The answer is yes, and I will come on to describe precisely what I am getting at in that regard.
That quote was hardly a ringing endorsement from the body that has pushed so hard for reform of the bribery legislation in the UK. There is a widely held concern among commercial organisations about the lack of certainty over what would be considered adequate procedures. It is acknowledged that the Bill would create, in effect, a large range of organisations, making it difficult for the Government to produce comprehensive guidance. The scales seem to be weighed in favour of using reasonable, a term with which companies and courts alike are familiar, rather than introducing a new concept of adequacy.
There are a number of examples in English law of criminal liability being imposed on companies, subject to a defence such as due diligence on the part of the legal person in question. One thinks, for example, of section 21(1) of the Food Safety Act 1990, section 34 of the Weights and Measures Act 1985, section 141A of the Criminal Justice Act 1988 and section 24 of the Trade Descriptions Act 1968. Such a defence may operate even when the offence to which it relates has a fault element and is not one of strict liability. In such a case, the defendant, according to the Law Commission, is saying:
There may have been fault on this occasion, but that it is not a reflection of the way that I run my affairs generally. Indeed, my business is run with systems in place whose aim it is to prevent this kind of incident.
The UK is not alone in the policy of imposing criminal liability on corporate entities. It is a global trend that can be seen from Scandinavia to Japan. The UK system tends to concentrate on the regulatory area of criminalisation, which broadly speaking is concerned with imposing liability as an incentive to good practice in a particular area. Such structures often focus on health and safety issues, broadly construed.
The rationale behind the due diligence or adequate systems defence was considered in some detail by the Law Commission in its 2008 report. In essence, a company should not be liable for a serious offence, such as a failure to prevent bribery, on the basis of a single instance of carelessness if it can show that it had robust management systems in place to prevent bribery from taking place.
The criminal liability in the Bill is imposed on the basis of the lack of supervision rule, which, for the classicists on the Committee, is culpa in eligendo, instruendo, et custodiendo. In other words, the offence is committed by a person, be they an agent or employee of the company, as a consequence of the companys failure properly to supervise them.
The defence recognises that the control of some behaviour is out of the hands of the company. The Law Commission provided examples of two such instances, the first of which reads:
An English company, C, that has anti-bribery policies of which employees are periodically reminded, takes over a company (YCo) based in a country where bribery by companies is common. Immediately following the take-over, a former employee of YCo (now an employee of C) bribes an official to secure a contract. The employees supervisor (also a former employee of YCo) says that he or she was still coming to terms with Cs new ways of operating, and had not fully appreciated the wholly categorical nature of the new policy. C is charged with negligently failing to prevent bribery by the employee.
The second example reads:
An English company, C, wishes to do business in Blueland. C employs an agent (X) living in Blueland to establish business contacts on Cs behalf with Government officials in Blueland. X bribes those officials to place contracts with C. C can show that it gave Y, their regional manager, the task of ensuring that all foreign agents complied with the companys anti-bribery policy. Y had failed in her task, as she was busy looking for a job with a rival company.
In both examples, the individual failings of particular members of staff do not necessarily illustrate systematic failures in the way in which C has sought to prevent the commission of bribery. As such, C would have a good defence to the offence under clause 7 if it can show that it had in place reasonable procedures designed to prevent bribery.
I would like to draw the Committees attention to a point that was made in the General Counsel 100 groups submissions to the Joint Committee. GC100 is the body the represents the general counsels of leading companies. The point was made in relation to whether a negligent element should be included in the offence, but I believe that it is also of use to our discussion. GC100 stated:
Unlimited fines and debarment from tendering for public contracts are real consequences of the new offence. As a basis for criminal liability, negligence is not generally sufficient to establish liability for serious offences. The only offence for which negligence is arguably sufficient is public nuisance, and the most recent corporate offence which is analogous is corporate manslaughter, where gross negligence is the required threshold...The appropriate test in this case should be that of gross negligence. That would apply where the standards of behaviour fall well below what could reasonably be expected, and is a more realistic test for an offence with such serious consequences.
The use of negligence as the basis for the offence was widely criticised by non-business witnesses. The point that I want to make about the amendment, however, can be drawn out relatively easily. What is proposed in the Bill has the potential to have devastating consequences for business. Unlimited fines and debarment might prove fatal, not least for small and medium-sized enterprises.
We are not so concerned in this contextalthough we are concernedabout a large global corporate that employs a 200-strong team of compliance officers to formulate, implement and monitor a bespoke anti-bribery procedure across the company. Our concern is mainly with the small business that, for instance, has just won a contract to supply specialist medical equipment to a foreign state.
Let us suppose that such a company employs 25 people in making, marketing and selling those highly specialised pieces of equipment. It will have a staff handbook and some guidelines on its internal computer network to deal with anti-bribery. It will even have given one of its salesmen the title of anti-bribery overseer, and all suspected cases of corruption will be reported to him. Employees will be able to go to him for confidential advice about certain business practices about which they are concerned. Our anti-bribery overseer will attend a two-day course every other year to be updated on the latest trends in the area of bribery.
That company, however, will never have fulfilled contracts abroad before, so it will be sailing into the unknown. A manager could be dispatched with the order of machines but be informed on arrival by customs officers that he is over his allowance of imported electronic goods if he brings the goods into the country and that his documentation has not been completed properly. A fine would be payable or the consignment will be confiscated, and he would be required to pay an administration fee to have his documentation corrected. The machines would be deliverable on that day, on a trial basis, and successful shipping would result in repeat business, but if they were confiscated, or there was an appeal, the consignment would be impounded for 90 days.
Under the Bill, if that manager were to pay the fine and the administration fee, he and the company would be liable to imprisonment and an unlimited fine. Furthermore, the company would be barred from procurement processes for major health care contracts throughout Europe. The anti-bribery procedures in place in that instance would not be adequate because they did not deal with the bribery of foreign officials. My example concerns a company undertaking work abroad for the first time, but the defence in clause 7 would not protect it. It is arguable whether that response in the Bill is proportionate.

Robert Syms: Such a scenario would probably be more relevant with a perishable product such as a foodstuff or something that would go off if it was not moved quickly to a secure or cold area. We all know that people sometimes hold up goods whose value diminishes if they do not clear the docks quickly.

Jonathan Djanogly: That good example was given in the Joint Committee and in the other place, so it is appropriate that my hon. Friend has brought it up.
The alternative, under our amendment, would be that the procedures would have to be reasonable. I put it to the Minister that a reasonable man might have looked at the provisions that the company had in place, when considering the facts of the case, and decided that they were reasonablenot adequate, because they would have required consideration to be given to foreign officialsbecause of the companys size and usual sphere of operation.
I do not want to go on much longer about this issue, but I would be grateful if the Under-Secretary would inform hon. Members of the Governments plans to issue guidance, and explain how consultation is being established with business. I should also be grateful if she would confirm that the clause will not become effective until such guidance has been issued.
We feel that there is a need for guidance on the offence as it is expressed to assist British business and prevent it from being disadvantaged on the world stage when competing with companies from many other states. Will the Minister therefore also explain how the guidance, once it is agreed, will be disseminated to companies? The difficulty with introducing comprehensive guidance is that many companies of many different sizes operate in the UK, in a multitude of business sectors and geographical regions. The Joint Committee acknowledged that when it recommended that appropriate bodies should be able to draft guidance that was tailored to specific sectors, and that the Government could approve to provide it with official status. That approach is supported by the Law Society, the Bar Council and one of the law firms that put its tuppenny-worth into the consultation.
We will return to the issue in more detail when we discuss my amendment 14, which relates to the guidance to be published by the Secretary of State, but I would appreciate the Ministers comments on amendment 12 as well.

David Howarth: This is one of those issues on which I thought we all agreed about what to do. The meaning of the word adequate is at issue. It was debated in the other place, and we all came to the view that guidelines should be issued to help companies to ensure that they comply. Having reached that agreement, I am not sure why we are debating the underlying issues all over again. I do not want to spend much time on them; I just wonder why the hon. Member for Huntingdon has not kept to what I thought we all agreed was the heart of the problem.

Jeremy Wright: I understand the point that the hon. Gentleman is making, but he will be aware that we do not have the guidance. Hypothetically, does he think that, in the absence of guidance, reasonable is better than adequate?

David Howarth: That question cannot really be answered because we do not have the guidance. It is entirely the case that extra information about the word adequate must be supplied to make it usable. However, there are problems with using the word reasonable, as the hon. Member for Huntingdon illustrated in his speech by using that word in a way that a court probably would not recognise. If we used the word reasonable, he would need to produce further guidance to explain its meaning to companies.
Hon. Members say that this is a strict liability offence, but that is not quite accurate. Somebody must commit the crime of bribery. The question then is whether that crime committed by an individual is attributed to a company. The law comes across that problem all the time. It is about vicarious liability, not the companys direct liability. There is no offence unless some human has committed the actual offence of bribery. The attribution is not strict either, in the way that it would be strict in a normal negligence case. In a normal negligence case, there is no excuse at all. If the employee has committed a wrong in the course of employment, that is itthe employer is liable. In the Bill, employers have a get-out clause in the form of the adequacy defence, and that seems a generous starting point.
To answer the question asked by the hon. Member for Rugby and Kenilworth about the difference between reasonable and adequate, it seems to me that, in general terms, what reasonable means in law is a sort of cost-benefit analysis. When answering the question of whether reasonable steps have been taken, one asks whether the defendant has taken precautions against whatever it is that we are talking aboutin this case, the commission of bribery by associated personsto the point where imposing more costs on themselves would yield no proper return on those costs. The question is whether those precautions have gone to the point where incurring extra costs would produce no appropriate benefit.

Oliver Heald: The Bill talks about precautions that are adequate for the purpose of preventing
persons associated with C from undertaking such conduct.
Does the hon. Gentleman see room for a situation in which procedures are in place yet bribery occurs, but a defence can be mounted? My hon. Friend the Member for Huntingdon was expressing concern about a situation in which bribery has occurred, the procedure was inadequate for its purpose and, ipso facto, the defence did not run.

David Howarth: That is what we, in the academic world, call the ex post interpretation of the defence, which does not make any sense. It is an interpretation under which the defence could never apply because whenever a bribe is taking place, the measures taken by the employer could not possibly have been adequate in that sense, as otherwise the offence would not have taken place. Therefore, it cannot mean that; it must mean something else. There is then a question about what it means, and that is why it is right to have guidance.
Finally, to answer the question asked by the hon. Member for Rugby and Kenilworth in a roundabout way, if the statute simply said adequate, and there was no further guidance, a court might think that it was a causation defence, which is to say that the court would look for extraneous events that interfered with the defendants efforts to prevent briberyperhaps an extraneous independent action by a third party. It might perhaps look for unforeseeable actions by third parties that made the precautions taken against the commission of bribery ineffective. Without further guidance, that is how things would look, and that is why guidance is important. However, as I said at the start, I thought we had come to a conclusion about what we were doing about this particular problem, and we should stick to it.

John Howell: Let me give my welcome for your time in the Chair, Ms Walley.
I think that this debate is necessary, particularly for those of us who were not members of the Joint Committee. It relates particularly to our discussion on guidance. We have heard a lot about the need for guidance, and I want to return to that subject in a moment.
First, I would like to address the practical questions that were asked by my hon. Friend the Member for Huntingdon about the fact that we do not need a one-size-fits-all system. In my business experience, I have worked for a large international partnership with branches in savoury and unsavoury parts of the world in which people do business. I have also run a small business that was active in different parts of the world, including the middle east.
What one can do with regard to putting systems in place differs between those two types of firms. In an international firm, its complexity, particularly in a large client-focused service company, means that it is difficult to see how one can get through the chain of the hierarchy of the company except by having values to which everyone is signed upthat was certainly the case in the firm that I worked for. It is different when it is ones own business, however. When my business partner at the time and I were pitching for contracts in the middle east, it was easy to ensure that we did not enter a situation that put us in a position of either being bribed or wanting to be bribed because only the two of us were the principals of the business and we were able to undertake the contracts. Such a situation involves quite different burdens and restrictions.
I want to raise a question that has not yet been asked about those large service firms. Let us take a large accountancy firm that shares its clients. Typically, there will be one particular partnership that has the head office function of looking after a major client around the world. Each of the partnerships around the world will provide services for the company in its own area and add different bits. In such cases, are those partnerships around the world providing a service to the head office of the client company, or to the head office of the partnership? The situation under the Bill will differ depending on which one applies, so we need to understand that.
I was also interested by the mention of agents. In my experience with agencies, it is rare for businesses, and particularly small ones, to have their own agent, because agents tend to work on the basis of having a number of different clients, and one of the difficulties is making sure that their other clients are not ones competitors. Those clients for an agent overseas will typically come from many different countries, so an agent acting for ones UK company might also be acting for a Thai company in a particular part of the world. All those clients bring their different legislative bases and the different cultures that go with them.
I am a little concerned that there is no practical element of how that will work and how we will put in place the mechanism for controlling an agent, because, although the agent is providing services, ones leverage over the agent is quite minimal in many cases.
There is also the question of the guidance. We have already reached a number of clauses that can be understood only with guidance. Effectively, two sets of guidance are required. The first is a vertical set of guidance on what is adequate or reasonable, if our amendment is accepted, for a large company, a medium company and a small company. There is some sense in having that.
It has also been suggestedLord Henley suggested it in the Grand Committee and others have done so todaythat we should have a vertical set of guidance that goes across industry-specific sectors. I can see some benefit in having that, but to understand the Bill when we go overseas we will have to take a briefcase full of guidance to ensure that we are doing the right thing. We are getting into a disastrous situation where we pass a Bill in this House that cannot be read on its own and where large amounts of the interpretation can vary significantly. Draft guidance has not even been produced for us while we are discussing the Bill, yet it could affect significantly the way in which British companies operate.
The other issue that we have not mentioned so far is one that the Joint Committee decided to park because it did not have time to deal with itthe role of subsidiaries and joint ventures. The difficulty is that we are between two stools. Do we want to capture the subsidiaries and the joint ventures, because it could lead to abuse if a company effectively allowed the bribery to take place through its subsidiary but it was argued that the subsidiary was not providing the service back to the company and so was not caught by the Bill? On the other hand, the last thing we want to do is to increase a network of obligations for subsidiaries that may not apply and that hold up the company dealing in the business.
That issue was parked. We were expecting a Law Commission conclusion that would inform a debate on the future of that. It would be nice to know when such a debate will take place and what the likely outcome will be. We need to understand how this will work in practice and what system will be put in place by companies to make sure that they can operate safely within the Bill.

Oliver Heald: There is just one matter about which I should like to ask the Minister. When the Joint Committee looked at this clause it referred to the impact assessment. On page 37, it stated that
we note the light-touch approach endorsed by the Impact Assessment for small firms in low risk sectors where it may be sufficient to demonstrate that anti-bribery principles have been fully communicated to its work force
Will the Minister confirm that there will be a light-touch approach in the guidance on small firms in low-risk sectors? Clearly, that would be a help. It is eight months since the Joint Committee did its work, and I imagine that the Ministry of Justice will have done some work in the meantime. It would be interesting to have an update on where the Under-Secretary, her colleagues and staff have got to on the guidance and the light-touch approach for small businesses.

Jeremy Wright: I want briefly to focus on one issue and return to the difference between reasonable and adequate. I understood what the hon. Member for Cambridge said. However, in the absence of guidance, which we do not have at the momentI know that we will come on to discuss what guidance we will get and when we will get itone of the questions that those in business and industry affected by the legislation

Joan Walley: Order. I seek clarification from the hon. Gentleman on whether we are moving to a clause stand part debate and having a discussion that is slightly wider than what is reasonable or adequate to the amendment.

Jeremy Wright: My point was specifically about the amendment because it replaces the word adequate with reasonable. Perhaps the Under-Secretary will be able to help the Committee on this matter. Assuming that we do not have full guidanceI will make that assumption for the moment, although we will come on to discuss guidance at a later stage

Joan Walley: Order. As we have already strayed into a wider clause stand part debate, it might be helpful if this contribution avoided the need for a clause stand part debate at a later stage. I am in the hands of the Committee.

Jeremy Wright: I am perfectly content to make my point either in relation to the specific amendment or to the clause, but I appreciate that some other members of the Committee might not have made all their points, as they did not realise that this was their opportunity to do so.

Joan Walley: Order. In that case, I shall assume that the hon. Gentlemans comments relate to the amendment.

Jeremy Wright: I am grateful for that guidance, Ms Walley. My point is straightforward and relates to the type of advice, particularly legal advice, that those affected by the Bill are likely to seek. We will assume for the purpose of the debate that there is no detailed guidance, although I understand that we will move on to that. Assuming that there is no detailed guidance to provide specific answers to points that are raised, people are likely to seek legal advice on this part of the Bill. It occurs to me that the legal advice that people are likely to receive would be more helpful if the word in question were reasonable than if it were adequate, simply because the courts are far more familiar with reasonable. The hon. Member for Cambridge gave a helpful indication of how the courts are likely to regard the word reasonable, but it is more difficult to do that for adequate. It would be useful to know whether the Under-Secretary has received legal advice on the likelihood of people getting sensible legal advice on the definition of adequate, should guidance not be available to them when this part of the Bill becomes an Act.

Claire Ward: I understand that your guidance, Ms Walley, is to continue with the debate on the amendment. However, many of the issues that have been raised are wider than that and relate to the clause stand part debate. I will touch briefly on those issues, and then, since hon. Members have indicated that they wish to return to a stand part debate, we can do so again. I do not wish to repeat the process.
The hon. Member for Cambridge worries me intensely. I find it difficult to agree with Liberal Democrats.

David Howarth: I am leaving soon.

Claire Ward: In order to make me feel more comfortable it would have to be not only the hon. Gentleman who is leaving, but his whole party. Nevertheless, I agree with him on this matter. He is right to say that we had agreed in another placewhich I understood to be a cross-party agreementon the inclusion of the term adequate, and that the appropriate way to deal with that was to provide guidance.
I draw the Committees attention to a letter that has been placed on the Table for this afternoons sittingindeed, I think it was also placed on hon. Members seatsthat gives a draft outline of the guidance that might form part of the guidance available under clause 9. I am sure the hon. Gentleman will want to come back to that matter.

Jeremy Wright: One of my hon. Friends made the point from a sedentary position that it might help the Committee to know why we have received that document at 1 oclock this afternoon. The Under-Secretary will have been fully aware that the guidance that was likely to be published in connection with the Bill would be an important part of the Committee debate. I suggest that to be handed that document when we are part way through debating the section of the Bill that is relevant to guidance is somewhat unsatisfactory. Given that the letter attached to the document is dated 11 March, it would not have been difficult to get it to us before 1 oclock this afternoon. Will she tell us why that has not happened?

Claire Ward: The hon. Gentleman will find that we thought the document would be helpful.

Oliver Heald: On a point of order, Ms Walley. It would be helpful to have a copy. I do not know whether there are any spare copies, but I have not got one and neither has my hon. Friend the Member for Poole.

Joan Walley: On that principle, it would be extraordinarily helpful for all members of the Committee, including the Chairman, to have a copy.

Claire Ward: I considered that it would be helpful, although, of course, it is not necessary to provide that information to the Committee at this stage, given that it is simply a draft outline of the issues we believe should be covered by the guidance. I felt it would be helpful to give hon. Members an opportunity to consider the document.

Jonathan Djanogly: On a point of order, Ms Walley. To receive the guidance, which some hon. Members have not even got, in the middle of the debate to which it is pertinent is, frankly, totally unsatisfactory. I suggest that the Committee immediately suspend for half an hour, so we can be given the opportunity to read the documents, take them in and consider a key issue to the whole Bill.

Joan Walley: This is entirely a matter for the Under-Secretary. I point out that there is still the opportunity for a clause stand part debate.

Jeremy Wright: Further to that point of order, Ms Walley. The difficulty with not adjourning the Committee is that we are all interested in participating in the ongoing debate on other clauses. Doing that while simultaneously reading the guidance is extremely difficult. That is the reason for the request for an adjournment.

Joan Walley: I call the Under-Secretary to reply.

Claire Ward: I felt it was helpful to the Committee to provide that information at this stage, but it was not necessary to do so. It is simply a draft outline of the issues that we have been considering and I thought it would be helpful. The hon. Gentleman asked why the letter is dated 11 March. If he really wants to know, it is because I had it in my weekend box and, unfortunately, because of the illness of my son I was not able to return it last night, so it came back this morning. That is why the Committee has it available today.

Jonathan Djanogly: Will the Under-Secretary give way?

Claire Ward: One moment. The hon. Gentleman may think he needs considerable time to consider the document. I propose to deal with the amendments he has tabled in respect of adequate and reasonable and the issues around that. This is an opportunity for him to consider the guidelines as we move into the next section of the debate: the clause stand part.

Jonathan Djanogly: I am sorry to hear about the Under-Secretarys personal circumstances, but I must remind her that it was her colleague the Minister in the other place who promised the guidance to Lord Henley, who I think called it the draft of the draft that was expected. I am afraid the situation is much more serious than it just being a case of the Under-Secretary not providing the guidance. Providing the guidance during the middle of the debate on the clause is unacceptable.

Claire Ward: I am sorry to repeat the point, but we are under no duty to provide the guidance at this stage. I am simply seeking to help the Committee to understand this guidance, which is a draft outline. Despite the many protestations that the hon. Member for Huntingdon may wish to make, there has been plenty of opportunity for him to consider the detail of the guidance, because it has been available to him for the last hour and a half.

Jonathan Djanogly: The Minister may not have noticed it, but I have been doing some other things over the past hour and a half.

Claire Ward: Precisely, but there was an opportunity for the hon. Gentleman to look at this matter when it became available this afternoon. The documents are simply to inform the discussion and the debate of the Committee. I am not under any duty to provide guidance at this stage. The hon. Gentlemans amendment proposes that we replace adequate with reasonable. Does he feel that companies should proceed on the basis that they have inadequate procedures in place, because that is the reality of the amendment?

Jonathan Djanogly: As I said in my speech, there may be circumstances in which something that is inadequate is reasonable. That may be an unusual situation, but that could be the case.

Claire Ward: A court will have an opportunity to consider all the factors. However, the hon. Gentleman is simply seeking to water down and to lower the threshold by replacing adequate with reasonable, and I cannot possibly accept the amendment on that basis.

Oliver Heald: On page 37 of the impact assessment, there is a reference to small business and the risk being low in certain sectors. In such circumstances, light touch regulation to ensure that staff are aware of bribery risk would be adequate. Is that dealt with at some point in the draft of the guidance? For example, is it dealt with under risk assessment and management, because small businesses do not seem to be mentioned anywhere?

Claire Ward: Perhaps I can be even more helpful to the Committee and suggest that we deal with the guidance under clause 9, which is where the guidance should be discussed in detail. I am more than happy to come back to a discussion on that matter when we come to clause 9.

Jonathan Djanogly: Are we going to have a break to look at it?

Claire Ward: I am sure that the hon. Gentleman is reviewing the matter carefully as I speak.

Jonathan Djanogly: I do not think that the Minister understands the importance of this issue. It was raised at every single stage by the Opposition in the other place and by the Liberal Democrats as well. Businesses consistently raised the matter. My hon. Friend has just read out what the CBI wrote today. The Minister is making a mockery of a very significant issue, and I am afraid that I want to put it on the record that her behaviour is unacceptable. She is suggesting that we discuss the matter when we get to clause 9, but, as she can see, all the amendments listed up until clause 9 are mine, which means that I will have no opportunity whatever to sit down and look at this, so her suggestion is totally unacceptable.

Claire Ward: I do not accept the views of the hon. Gentleman. I have sought to be as helpful as possible to the Committee by providing some information on the basis of the discussions that we have already had with our stakeholders, companies, the CBI and other organisations. On that basis, I felt that it would be helpful to provide the Committee with some indication of where those discussions were going and the sort of issues that we may well be covering. I am sorry that the hon. Gentleman does not share that view on how helpful that guidance will be for many people.

Jeremy Wright: The Minister is slightly misrepresenting the position of my hon. Friend the Member for Huntingdon. I do not think he argued that the guidance is not helpful. He said that it would have been more helpful if it had been delivered earliereven, frankly, if we had received it before the lunch adjournment or when the Committee roserather than when we all got back to our seats and went straight back into other Committee business.

Claire Ward: I have pretty much said everything I possibly can on the matter. I intend to move on and deal with the issue in the amendment, which is the suggestion that we should replace adequate with reasonable.
As I have already said, I do not believe that that is acceptable. It is a watering down of the test. It would allow an organisation to argue that, although the procedures were wholly inadequate, they were none the less reasonablefor example, the resources available to the organisation to devote to the prevention of bribery. The hon. Member for Huntingdon gave a series of examples in his remarks.
The amendment could result in a court, when considering the applicability of the defence, taking into account all manner of subjective factors such as, for example, the extent to which it was practicable, bearing in mind the distraction of a change management programme; or whether it was reasonable, given the financial position of the organisation following a significant outlay on new production equipment; or whether, due to the quick onset of the organisations entry into a new market, there was insufficient time to put procedures in place. Those are subjective factors and I do not believe that it is acceptable to lower the threshold from adequate to reasonable. There is no incompatibility between adequate procedures and the commission of a bribery offence on behalf of a commercial organisation that has them in place. Indeed, in one of the examples that the hon. Member for Huntingdon gave, that is an issue that no doubt a company would wish to raise as part of its defence to show that it had adequate procedures in place.
We recognise that systems meeting the highest standards may still be ineffectual in preventing bribery by a rogue individual determined to commit such an offence. When reading the clause as a whole, it is clear that, despite an isolated bribe being paid on behalf of an organisation, the organisation may still plead the defence and absolve itself. I think that deals with the case that the hon. Gentleman raised.
We believe that the word adequate strikes the right balance. Commercial organisations should have adequatenot simply reasonablebribery prevention procedures. It is reasonable to expect them to have adequate procedures in place. On that basis, I ask the hon. Gentleman to withdraw his amendment.

Jonathan Djanogly: I find this whole situation highly unsatisfactory. Let me first address the hon. Member for Cambridge, who asked why we were debating the underlying issues now. My basic answer to him is: because the Committee has not debated them before. That means, as my hon. Friend the Member for Henley made clear, that we have every right to do so, despite what was previously debated, and wherever it was previously debated. I know that the matter was debated in the other place, that the Joint Committee had a look at it, and that it came up when the Minister and I spoke to Transparency International UK. It has probably been debated in many other forums that I have been to, but the Committee has a right to address the serious issues. I consider that we, as the main Opposition party, have a duty to debate the main issues that are part of the Bill. We would be negligent if we did not do so, so I make no apologies here[Hon. Members: We need an adequate debate.] Quite right.

David Howarth: I think we need a reasonable debate.

Jonathan Djanogly: A reasonable debate sounds good to me, but I am not sure whether we are there at the moment.
The hon. Gentleman likened the definition of reasonable with a cost-benefit analysis, which was quite a good way of considering it. However, he assumes that the reasonableness test will, as a result, be contained in the guidance. In a big debate in another place, it was said that the reasonable element will go into the guidance, but in the two seconds that I have had to look at the outline guidancethe draft of the draftI have not seen anything about reasonableness, although perhaps I have missed it. Presumably that information will be slipped quickly into the final version.

Oliver Heald: Does my hon. Friend agree that we have new things to debate? We have the draft outline of the guidance, which nobody has seen before. The CBI has thought about what happened in the House of Lords and made representations to us on its latest position. It has not raised every point that it made before, but those that it still thinks are importantthis is new material.

Jonathan Djanogly: I want to make it absolutely clear that although the letter from the Under-Secretary is dated 11 March, my hon. Friends and I did not see the guidance until an hour or two ago. I have not had the opportunity during our sitting to give it any consideration. As has been said, an opportunity to consider the guidance would have been helpful, and that was why I was so keen to know what stage we were at with its production. In all that has been said so far, I do not think that the Under-Secretary has explained where we are with the production of the guidance, but we can discuss that during a stand part debate.

Jeremy Wright: On clause 9.

Jonathan Djanogly: Indeed.
The Under-Secretary discussed the impact of reasonableness, and we have reached an understanding that that is an outstanding issue. We will have to consider that when taking a view on the guidance. I cannot say whether we will have time to do that, given the way in which these Committee debates are panning out, but it is unlikely, so the way in which we will approach the Bills later stages is looking increasingly interesting. If this is an example of how the Bill will continue, I am not impressed, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Jonathan Djanogly: In one way or another, we have had something of a stand part debate on what Lord Henley described as a draft of a draft. I have not had the chance to look at it, however, so everything that I say is premised on that.
We are concerned that there is no reference in the document to reasonableness. Although the Under-Secretary said there would be reference to the clause 6 offence, a cursory glance suggests that there is not. As a starting point, it would be helpful if she explained the feedback she has had from those in the business community and non-governmental organisations with whom she has consulted on this draft of a draft.

Claire Ward: On a point of order, Ms Walley. Are we are discussing the guidance in respect of clause 9, which is the guidance clause, or having a stand part debate on the offence in clause 7? That is not clear from what the hon. Gentleman is saying.

Joan Walley: In response to the Ministers point of order, I say to the Committee that we are having the stand part debate on what is presented in the Bill as clause 7. It seems to me, given what is being said, that there will be ample opportunity to discuss the guidance when the Committee discusses that aspect of the Bill. We will now resume the clause 7 stand part debate.

Jonathan Djanogly: On that basis, I will make no further comments at this time.

Claire Ward: This important clause is concerned with the powers of commercial organisations to prevent bribery. The new offence is a key element in the reform of bribery legislation because it underpins the development of a corporate culture in which bribery is not tolerated, as is set out clearly in the clause. I encourage the Committee to support the clause.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8

Meaning of associated person

Jonathan Djanogly: I beg to move amendment 13, in clause 8, page 6, line 3, leave out from circumstances to end and insert including but not limited to
(a) the extent of Cs influence over A,
(b) the degree to which A was able to act autonomously of C,
(c) the particular circumstances of any joint venture or consortium arrangements, both documented and arising by virtue of the parties conduct, between A and C, and
(d) the nature of the relationship between A and C..
The clause deals with the meaning of an associated person in the context of the clause 7 offence:
Failure of commercial organisations to prevent bribery.
The amendment deals with concerns about remaining ambiguities in respect of the application of the offence in clause 7 as a result of the current drafting of clause 8(4), particularly the interpretation of the words
performs services for or on behalf of C is to be determined by reference to all the relevant circumstances.
The ambiguity that arises as a consequence of its interpretation might create practical difficulties for banks and syndicates, companies and joint ventures and large group companies, as the law firm Clifford Chance submitted in its evidence to the Joint Committee. For example, is the lead bank in a syndicate performing services on behalf of the other banks? Is a company in a joint venture performing services for its joint venture partner? Is a bribe paid by an employee of a subsidiary of C, to gain a contract for that subsidiary, made in connection with Cs business? Does the answer differ if C is the sole holding company, a 51 per cent. shareholder or a 20 per cent. shareholder?
Clause 8 ties in with the offence specified in clause 7 and provides that A is associated with C for the purposes of clause 7 if A
performs services for or on behalf of C.
It also ensures that clause 7 relates to the actual activities being undertaken by A at the time, rather than As general position. The clause expressly states that A may be the commercial organisations employee, agent or subsidiary.
Our amendment would clarify the clause and clearly signpost considerations that must be taken into account when deciding whether entities are associated for the purposes of clause 7. It was tabled to explore the nature of the association that the Government wish to capture with the Bill and, at the same time, to suggest an improvement to the current structure that would assuage concerns expressed in the other place and by a number of business organisations. Consideration would still be taken in respect of all the relevant circumstances, as required under the current draft of the clause, but emphasis would be placed on considerations regarding the extent of control exercised by C over As behaviour and the formal relationship between A and C.
Having listened to the concerns of business groups, we believe that the clause as drafted could present significant problems to UK businesses engaged in consortiums in international JVs. We received a representation on that from the CBI this morning. The CBI believes
that the Bill as written does not take due account, nor can it properly cope with, the realities of a variety of corporate structures. This is particularly the case for joint ventures in all their forms, project work, construction, extractives and the financial sector.
It states:
It cannot be right that business finds itself criminally liable where it has little, limited or no ability to influence or control its partners. This is not to say that UK business fails to exercise the influence that it can within the constructs of the contractual or business relationship. The CBI is worried that failure to recognise and act on these concerns will have a detrimental effect on UK competitiveness, not just in terms of existing arrangements but potential future business.
Lord Henley spoke about this matter in the other place and provided an insight into the concerns of some businesses. He said:
Much international business in the petroleum, mineral, banking, financial and construction industries is conducted through consortia or contractors who have sole or overall responsibility for a project.
He continued to say that a UK companys relationship with other entities
is not one of control, but regulated by contract only. In many cases, the partners may be state entities. A UK company, especially in one of the extractive industries, may have no choice but to take a state entity as a partner. It can investigate potential partners and then monitor them for bribery, using contractual provisions or by exercising its maximum influence. The latter is regarded as acceptable in United States practice, and that may be the maximum extent of the control of its fellow consortium member that the UK company would be able to exercise.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC57.]
There can be no doubt, however, that partners in such industries mutually perform services. If the Bill was passed unamended, in certain regions and in respect of certain resources, a UK partner company would have no choice but to abstain from participation in certain projects, or worse to pull out of the consortium altogether. What is the Ministers view on whether the provisions in the Bill will be sensitive enough to deal with such situations?

Robert Syms: My hon. Friend makes a powerful point. There are a number of collaborationsAirbus is a prime exampleinvolving several countries and companies of different types that sell products abroad. There is a real risk that, as a minority participant, as we used to be through British Aerospace, a British company could be prosecuted, but the other companies involved, from the rest of continental Europe, would not be.

Jonathan Djanogly: My hon. Friend gives a good example. This is a real problem. Companies will often go into partnership with others through joint ventures. They might start with a majority stake but over time, due to a contract proviso, that may be sold down to smaller stake, at which point control is lost and the ability of the British company to manage the relationship becomes weaker, which means that the problem that he raises becomes more acute.
Of equal concern to business groups is the competitiveness of UK bribery laws when compared with those of other countries and potential competitors. For example, the USA and its feared Foreign Corrupt Practices Actwith which parallels have been drawn throughout the Bills passagerecognises, particularly in its audit provisions, the importance of the degree of control when deciding a companys responsibility for bribery by associates. The Bill makes no such allowances, as the sole criterion is whether services are being performed. The cost to British business due to that could be considerable, and it would rise to an even greater magnitude if UK companies had to withdraw from existing groups because of the Bills impact.

John Howell: I am sorry if I raised this point prematurely in an earlier debate, but the typical agent is much stronger and more powerful than those companies for which he is agent. Does my hon. Friend agree that that is another indication that the practicalities were not thought through before the Bill was published?

Jonathan Djanogly: My hon. Friend raised that point in an earlier debate and he rightly makes it again. This is a sensitive area and we could easily get things wrong. As businesses are saying, I do not think that we have received enough indication from the Government about how the provisions will be put into practice. I can understand why, particularly in certain sectors, such as joint ventures in developing countries, those involved would be very concerned about exactly where they stand in relation to the application of the clause. In any event, companies from other jurisdictions will quickly fill the places that might have been available for UK enterprise.
Concern was raised by the Joint Committee about the consequences of the Bills application to joint ventures and subsidies. The time constraints imposed on the Joint Committee prevented it from reviewing the issue in detail, but it made specific reference to its concerns and the need for future debate. The Joint Committee said:
The limited time that was available to complete our inquiry has prevented us from focusing on this issue in more detail. However, we note that a parent companys liability for a subsidiary is one of the issues due to be considered as part of the Law Commissions general review of corporate criminal liability and we anticipate that the Law Commissions conclusions will valuably inform future debate on this difficult issue.
Lord Tunnicliffe, when speaking for the Government in the other place, noted:
The formulation of the defence under Clause 7 is broad enough to cater for different corporate structures: including contractors, consortia and joint ventures. The Government are also committed to publishing guidance on the meaning of adequate procedures well before this offence is brought into force.
Perhaps the Under-Secretary will say whether that is included in the draft of the draft that we have just received.
Lord Tunnicliffe also stated:
We are considering what guidance may be appropriate in respect of different corporate structures. This is not a one-size-fits-all approach. The procedures should be appropriate to the circumstances of the enterprise.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC51-58.]
I would like to make two points about that, and I hope that the first will be the easier one to answer. Will there be further details on the form of guidance that we will get in this area. Will the Under-Secretary explain the extent to which she has discussed it with business? Do the Government intend to consult on this area, and, if so, will she tell us the time frame involved?
Lord Tunnicliffe was good enough to give us a taste in the other place of what can be expected, but I hope that the Under-Secretary will elaborate on what he said. He stated on Report:
We envisage that later sections of the guidance will cover, for example, what organisations can do to plan, implement and monitor anti-bribery policies...as will challenges faced by organisations when seeking to put into place measures designed to deal with the risk of bribery on their behalf by subsidiaries and other organisations with which they are associated in a joint venture. It may be useful to include a section detailing further useful reading materials-guidance published by the Serious Fraud Office, by business groups such as the ICC and by NGOs such as Transparency International and the Institute of Business Ethics.[Official Report, House of Lords, 2 February 2010; Vol. 717, c. 146.]
Are we to understand from that that the Government will be reproducing sections of guidance from other organisations, or will they be providing original and specific guidance? That is important, especially when considered in the light of the Joint Committees concerns, which I have already cited.
The second aspect that I would like to draw out is the Governments point about a one-size-fits-all approach. Business is uneasy with the possible broad implications of the clause 7 offence. Following a review of the debates in the other place and, indeed, our debates in Committee today, it is clear that the Governments concessionthat is what it was originallyto produce statutory guidance is motivated in no small part by such concerns.
I believe that the phrase all the relevant circumstances in clause 8(4) allows for account to be taken of the different dynamics that relate to the sector, the size of company and the risks associated with markets. It might go some way towards addressing the fact that the Bill pays scant regard to the reality of corporate structures. In todays global economy, the chain of command from head office to local employees might be a long one, and proving the degree of supervision required to prevent something from being done on ones behalf by a third party might be extremely difficult. I will be grateful if the Under-Secretary addresses that issue.
In evidence to the Joint Committee, the legal adviser on the Bill recognised those problems and commented, in response to a question by Baroness Whitaker:
We recognise that the OECD has itself identified problems with foreign subsidiaries.
He talked about what clauses 7 and 8 do together, and said that clause 8(4)
makes clear that whether a person or body was performing services on behalf of another person is to be determined by reference to all the circumstances. So you have to look at whether, first, A was performing services for or on behalf of C. You then also have to look at whether the bribe was in connection with C's business. So, obviously, the jury and the court will be looking at those elements and, if it can be established that there was this connection, then it is fair that C shall be prima facie liable, but if the foreign subsidiary has no connection with the UK other than its parent company being located there, then we do not think it should be caught
by the offence. He further stated:
We do not think that the question of ownership is sufficient justification for taking jurisdiction over foreign subsidiaries.
I would be grateful if the Under-Secretary would confirm that that is the current position.
The phrase all the relevant circumstances is too opaque for businesses to apply practically to their dealings. They need some signposts as to the elements that will be at the forefront of the consideration of whether A is a person performing services for or on behalf of them. We suggest that more emphasis needs to be placed on the degree of control exercised by C, and I would like to know whether the Under-Secretary agrees with that position. We would like to understand from her why signposts on the factors that will be considered by prosecutors and jurors cannot be formalised in the Bill.
Throughout debate in Committee and in the other place, much has been made of the need for prosecutorial discretion. In previous debates, we have questioned the reliance of the Government on that. The amendment seeks to facilitate such discretion, by clearly signposting those considerations to which prosecutors should pay particular attention.
The concerns that I have just set out have been raised by the International Chamber of Commerce and other business groups, such as the CBI. It is often in the nature of international business to operate in joint ventures. The point was raised in the other place that a company, even though it may have no control over a joint venture partner, may none the less be caught by the provisions of the Bill, due to that partners conduct. Although the Government have previously attempted to explain the problem, by stating that the degree of control would be one of the circumstances taken into account when deciding whether an offence has been committed, it is not clear to what extent such comfort would be effective in law. There will be much to keep the lawyers busy as a result.
As it stands, the Bill does not deal adequately with the possible liability of a company for acts of bribery committed by a subsidiary or joint venture company in which it holds an interest. The Joint Committee was unable to come up with proposals to deal with that because of shortage of time. It was allowed only a very busy 10 weeks in which to consider the Bill. As a result, we are concerned that the Bill does not include any recommendations on how to deal with the problem.

Robert Syms: Companies working in the third world sometimes make donations to non-governmental organisations that provide associated services such as medical care and some environmental benefit. Is there a risk that a donation to an NGO may be perceived as a bribe, as with political and corporate hospitality donations? Unless we get clear reassurance from a Minister that it would not be included, might that be drawn into the ambit of the Bill? If a community benefited via an NGO from an oil or mining company, that might be perceived as a bribe.

Jonathan Djanogly: The Under-Secretary might wish to come back on that issue. If there is no financial advantage for the NGO, my understanding is that such an application is unlikely, although the provision might apply to the person paying the NGO if financial advantage were involved. That gets complicated and I am sure the Under-Secretary will be well briefed on the answer to that question.
Finally, will the Under-Secretary confirm that the Law Commission will consider this gap when it reviews the law on corporate liability for crime? That may be some time off. Meanwhile, the absence of rules in the Bill could lead to difficulties for British business involved in joint ventures or consortium arrangements. We would have preferred to have the matter covered by the Bill and that is why the amendments were tabled. The gap will have to be closed at some date, if not in Committee, but we believe it should be as soon as possible, otherwise British business could be left in the dark.

David Howarth: I am not sure that the joint venture problem is as murky and difficult as the hon. Member for Huntingdon says, as long as one breaks it into its constituent parts. In a joint venture, a number of partners come together to create a joint venture vehicle. The first question is whether, if that joint venture vehicle engages in bribery, that should be part of the system established by clause 7 with regard to failure to prevent bribery. I cannot see why the answer is anything other than, Of course, the joint venture company is acting on behalf of the people who create it. That is the whole point of a joint venture. I cannot see why anyone should object to a situation where, if one creates a joint venture vehicle and it acts corruptly, one should claim that it was not acting on ones behalf. That is clear to me.

Jonathan Djanogly: What if there is a 2 per cent. holding in the joint venture, with a contractual clause that gives some power to determine how it performs in certain regards?

David Howarth: The question is this; what is the adequate anti-bribery system to put in place, not only in the contractual relationship between the partner and the JV vehicle but in the JV vehicle itself? Of course, one would have a chance to influence that or a chance not to take part in it if it was inadequate. We have the adequacy provisions in front of us so that we can judge that. That is the first point. I really do not think that that is unclear at all.
The second point is what happens if the bribery is carried out by an employee of the JV vehicle, so that the bribery is one step removed? However, that depends on the attribution rules that apply to the JV vehicle with regard to its own employees. If the attribution rules about briberynot about the failure to prevent bribery, but about briberyare such that the JV vehicle itself is then guilty of bribery, the same applies. Again, I do not see any problem there.
Of course, we are not talking about what happens if the JV vehicle is guilty of the crime of failure to prevent; that is a different question altogether. I think that there is some confusion here between the two crimes, the crime of bribery and the crime of failure to prevent bribery.
The third possibility is that one partner in the creation of the JV vehicle could be held liable for what other partners do. That is a completely separate question, but it is answered simply by applying the clause as it stands. In those situations, there is no employer relationship and there is probably no agency relationship. It is not a subsidiary, so I would have thought that it would have been more difficult to establish that there is a relationship of performing services for or on behalf of the other JV partners, because they are all acting through the JV vehicle.
Therefore, the clause provides a degree of flexibility. Whenever drafting provides flexibility, people claim that it is unclear and of course when drafting does not provide flexibility, they claim that it is unfairly rigid. However, it seems to me that the three possibilities are dealt with adequately by the clause as drafted, and the problems that the hon. Member for Huntingdon is putting forward largely arise because he seems to have conflated the three examples in the speech that he made.

Claire Ward: The amendment raises important factors, which need to be considered. The issue at stake is whether particular emphasis should be placed on the four factors listed in the amendment when a court considers whether a person committing a bribery offence is a person performing services for the commercial organisation charged with a clause 7 offence. That is not to say that those four factors are not important or should not be taken into account. There is no doubt that the degree of control that a commercial organisation exerts over a person is relevant to whether he or she performs services for the organisation. However, the better course is not to elevate particular factors relating to the degree of control but to leave it to the court to decide which factors it wishes to take into account and what weight to give to those factors.
Clause 8 provides that the question of whether a person is performing services on behalf of an organisation is to be determined by reference to all the relevant circumstances. We do not think that it is necessary to explain that further in the Bill, by specifying particular sets of circumstances that the court should take into account. It goes without saying that all the relevant circumstances is likely to cover the extent of the organisations control over the person paying the bribes. Therefore, the factors listed in the amendment may well be relevant, but other factors that the court may wish to consider may also be relevant.
That is always the danger of adding a list such as the one contained in the amendment. It can have the effect of elevating the importance of those matters specified in the list to the exclusion of others, which may be just as relevant or indeed more relevant in any given case. I believe that this is a situation in which we can leave it to the good sense of the court and the jury.
Many of the other issues that have been raised relate to guidance, and instead of repeating myself, it is more appropriate to return to them on clause 9. However, the hon. Gentleman made a specific point that I want to draw to his attention in respect of the Law Commission. My noble Friend, Lord Tunnicliffe, made it clear in the other place that
Following a request from the now Department for Business, Innovation and Skills in late 2008, and as a result of discussion with that department and the Ministry of Justice in early 2009, the Law Commission's corporate liability project took as its focus the use of the criminal law as a way of promoting regulatory objectives or public interest goals, particularly how businesses are treated by the criminal law. Consequently, I advise the House that the liability of a parent company for the acts of its subsidiary is outside the scope of the current project. However, the Law Commission expects that this issue would fall to be considered in a future project as part of a general review of the law on corporate criminal liability. [Official Report, House of Lords, 2 February 2010; Vol. 717, c. 142.]
I hope that that deals with the point that the hon. Gentleman raised.

Oliver Heald: I thank the Under-Secretary for saying a little more about joint ventures. I had understood from the comments of the hon. Member for Cambridge that the joint venture vehicle would be liable in such circumstances, not the constituent parts, which are separate corporate entities. Does she agree?

Claire Ward: That would depend on the circumstances and whether the joint venture were the corporate liability, and also whether the companies that are component parts of the joint venture were liable. It would depend very much on the circumstances of the offence, and in which organisation the joint venture was formed. On that basis, I encourage the hon. Member for Huntingdon to withdraw his amendment.

Jonathan Djanogly: The hon. Member for Cambridge said that the matter is straightforward, although it did not sound straightforward to me. I will consider what he said, and perhaps return to the matter later.
The Under-Secretary said that the issue was important, and we agree. She then said that it should be left to the courts, backed up by guidance, which we do not yet have, except in a draft of a draft form that we have not had a chance to examine. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 ordered to stand part of the Bill.

Clause 9

Guidance about commercial organisations preventing bribery

Jonathan Djanogly: I beg to move amendment 14, in clause 9, page 6, line 10, after section 7(1), insert
at least 30 business days prior to sections 1, 2 and 6 coming into force.
We recognise that it is extremely difficult under the law as it stands to prosecute a company for failure to prevent bribery carried out on its behalf. The clause 7 offence will require all corporations conducting business to treat bribery as a very serious issue, and compel them to set up proper systems to prevent bribery on their behalf.
Clause 9 as drafted requires the Secretary of State to publish guidance on procedures that relevant commercial organisations can put in place to prevent bribery. There was much debate in the other place on this issue, and that ultimately resulted in the current formulation of clause 9. We welcomed the Government amendment that was forthcoming in the other place, but as drafted, the clause still has serious problems. Our amendment seeks to draw out from the Government a statutory commitment to ensure that the guidance that has been alluded to throughout our debates in Committee and in the other place is published in a timely fashion to ensure that businesses have time to consider how the laws will apply. Although I have not had long to look at the draft of the draft, I must say that it needs a little more work, as most members of the Committee will agree.
The Joint Committee was emphatic about the need for guidance before the offences become law. It said:
There is no reason why the preparation of official guidance should delay the passage of a Bribery Bill. It should, however, be available for use before the offences come into force in order to give businesses time to prepare for its introduction.
We acknowledge that in the other place the Government moved considerably in response to amendments, and we hope with our amendment to go the final hurdle and ensure that the guidance is workable. Lord Tunnicliffe recognised the importance of guidance, stating
we recognise that the offences in this Bill are a special case and that guidance is necessary to assist those who might be directly affected by the offences in this Bill.
He went on to note that the guidance formulation procedure was already under way with Ministry of Justice officials meeting
with a number of experts from organisations such as Transparency International, the Institute of Business Ethics and the Anti-Corruption Forum about what should be included in the guidance.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC51.]
I notice that business organisations were not included, and I should be grateful if the Under-Secretary explained which business organisations she or her Department officials have met.
Who are the other stakeholders, and what progress on the guidance has been made to date? Has it moved on from the draft of the draft? Is the fuller version under way? Lord Goodhart offered a snapshot of the clear justification for guidance, when he said:
Penalties under Clause 7 could be very serious, so we believe that it is necessary to provide guidance so that corporations are not at risk of straying unintentionally into a field in which they may become liable for serious consequences. [Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC47.]
The Liberal Democrats seem at one with us on the issue.
Guidance will be crucial to ensure both the proper practical implementation of the Bill, and that it does not have a detrimental effect on business. That will be especially important for those companies operating in areas in which bribery is seen as the norm among briber and recipient alike. With one eye on the parliamentary timetable and the other on the usual timetable for producing draft guidance, it seems unlikely that we will be producing guidance before the general election.
It is essential that, before companies are charged under or bound by a statute that requires adequate provision, they should know what the Government believe to be adequate provision in principle and what it would be in their particular case. The potential disproportionate impact of the Bill on businesses if guidance is not produced in a timely fashion could be devastating. It is all very well for larger companies to obtain advice from specialist lawyers, but it is not so easy for smaller companies to obtain the necessary advice that would be desirable. It is not an area of law that can be found in the average high street practice.
In evidence to the Joint Committee, the UK Anti-corruption Forum added that it was costing companies large amounts to develop policies and seek advice on a fragmented basis. The need for guidance attracted widespread consensus throughout the evidence-gathering sessions before the Joint Committee. The issue of immediate concern to business and that forms the focus of the amendment is compliance guidance, which should be differentiated from prosecution guidance.
The Director of Public Prosecutions accepted that centrally issued guidance on prosecution policy could be prepared by prosecutors under the superintendence of the Attorney-General. He anticipated that it would outline the approach that prosecutors would take under the proposed offences, while noting that no other Department could provide such guidance since it would undermine prosecutorial independence. That is to be welcomed, and we very much support the DPPs stance, but our aim with the amendment is to focus on so-called compliance guidance, which is far more important to businesses in the short term, as was recognised by the DPP.
As it stands, we are in a rather interesting position. It is not that businesses lack information or guidance. We are informed that the OECD is working on good practice guidance on internal ethics and that controls are due to be published later in the year, which the Government will undoubtedly wish to reflect in their guidance. Organisations such as Transparency International and the Global Infrastructure Anti-Corruption Centre have published on their websites an impressive range of anti-bribery strategies. In evidence to the Joint Committee, Louise Delahunty of the law firm Simmons and Simmons noted the plethora of international sources of advice, and said that the Government were best placed to bring clarity to the situation. Business does not need more vague guidance. It needs definitive guidance that carries the weight of law and the authority of Parliament.
Lord Tunnicliffe stated in Committee in the other place:
The guidance will also be designed with businesses of all sizes in mind. What constitutes adequate procedures for one organisation will be over the top for another. The procedures put in place by any organisation must reflect the circumstances of that organisation. Indeed, the flexibility of non-statutory guidance should help to achieve that objective.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC52.]
That is most welcome. Such proportionality and understanding of the concerns of small business is remarkably lucid for a Government whose track record on helping small business is generally less sympathetic.
His lordship went on to indicate some of the Governments expectations as to the scope and content of the letter. Having just received this letter, it would be interesting to see to the extent to which it is reflected in what the Minister in the other place said to the Grand Committee.

Jeremy Wright: I have had a little more time to look at the document than has my hon. Friend. The foreword to the document talks of:
Stressing the indicative nature and flexibility of the guidance and its relevance to large and small organisations alike.
That is not much indication of there being a different approach for large and small organisations. It continues in brackets, saying that
the application of the guidelines to small companies will need substantial further work.
Does that suggest to my hon. Friend, as it does to me, that we are back in the territory of prosecutorial discretion, with no variation in the types of regulations but a set of guidelines that may or may not be applied depending on the size of the business?

Jonathan Djanogly: I thank my hon. Friend for that. The more we hear about the guidance, the more complications seem to arise. Forgetting the immediacy of having received the letter only today, but putting it in the wider context of where we are in relation to the Bill, it is unfortunate that this draft could have been received not today but when the matter was being debated in the other place, or at least before we had started our deliberations, as we could then have given more thought to the matter. That would have been to the advantage of all; I do not wish to make a party political point, but we are not in that situation. I hope that my hon. Friends will take advantage of my remarks and read the letter, so that they can make constructive comments when we come to the stand part debate.
The Committee will recall that the issues that guidance were said to cover would be: the responsibilities of an organisations board of directors; the identification of a named senior officer with particular responsibility for combating bribery; risk management procedures; gifts and hospitality policy; facilitation payments; staff training; financial controls; and reporting and investigation procedures. It would help if, in the stand part debate, the Minister were to tell us to what extent those headings have been developed in the letter that we have just received. It was said to be a non-exhaustive list of the topics that guidance would cover.
A promise in the other place of a letter setting out a more detailed list of Government guidance was forthcoming, but was never delivered upon. Unfortunately, such assurances seem to have been the source of some confusion, and a later qualification was added in response to Lord Henleys summation of the debate on this part of the Bill. I shall recount those assurances so that members of the committee can fully understand our reluctance to leave the important issue of guidance, and how it is to be brought about, to anything other than the provision of statute.
Lord Henley said:
I note the assurance from the Government, which I think I have got right, that in advance of Report we will see a draft of the guidance.
Lord Tunnicliffe replied:
My Lords, I am afraid that we have not given that assurance, much as it might satisfy people. We will produce a revised statement of the things that will be going into that statutory guidance. We are not saying that we cannot do it by then, but we are not giving an assurance that a draft will be available by Report.
Lord Henley then said:
My Lords, it seems that the assurance from the noble Lord is that we will have a draft of what might be going into the draftor something like thatthat we can look at in advance of Report. I suspect that it will not be enough and that we will wish to come back to this in one form or another.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC56.]
The Lords discussed the Bill on Report a long time agoperhaps someone can give me the dateyet here we are today, which is hardly impressive. We heard further from Lord Tunnicliffe on Report, when speaking to the Government amendment, but, as Lord Henley pointed out, the promised draft of the draft was not forthcoming.
I note that the Secretary of State touched on the matter on Second Reading. He was not forthcoming on the details of the guidance, but it was good to hear that in the past 18 months the Secretary of State had held round table discussions with Transparency International, the Catholic Fund for Overseas Development and others. Will the Under-Secretary provide the Committee with a list of the other bodies, including small business groups, that the Government have consulted on the draft of the draft?
We need to keep in mind the Joint Committees finding that there is a lot of guidance in circulation. A number of groups offer guidance, but the important thing is to have authoritative guidance from the Government that can be relied upon by business. The mere fact that it has come from the Ministry of Justice, among the many international authorities putting up guidance, would not make it authoritative. However, guidance done under the authority of Parliament tells the court that the guidance must be taken into account and, as such, it is a far more effective remedy for people who are extremely anxious about such a serious offence. The guidance proposed is to be introduced for the first time and it is very difficult to say what the ultimate consequences might be.
The argument was put forward most forcefully by Lord Mackay in the other place, drawing support from a number of those present, with Lord Thomas of Gresfords perhaps the most eloquent summary of the problem faced if the guidance was not in a form that was reviewed by ParliamentI ask the Minister to consider those words most carefully before responding:
If there is a case against a company that is charged with an offence of strict liabilityvery unusual in criminal lawand it puts forward as part of its defence that it was relying on procedures that it had read about in some book or other, written by somebody with some authority and experience in the area, the judge can easily tell the jury to ignore all that. There is no force behind what an individual has written in a book or set of procedures. There is no force behind anything like that. It is very different if the guidance is under a statutory power and the judge must tell the jury that it must take into account the fact that procedures which have statutory backing were relied onor that is the defenceby the company that stands before it, charged with a strict liability offence.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. GC55.]
One matter that was briefly touched upon was the Department that was to draft the guidance. In the other place discussion revolved around whether the Ministry of Justice or BIS should produce the compliance guidance. Will the Minister confirm which Department is to draft the final guidance? How will the Departments work together on that?
The Joint Committee highlighted the concerns expressed by the Secretary of State for Justice in relation to the possibility of the Department producing authoritative guidance. Some suggestions in the evidence-gathering sessions before the Joint Committee posited a middle ground based on the current money laundering regulations, whereby guidance is produced by professional bodies, which would then be given official status through recognition by the Government. Such guidance would be admissible as evidence in court as to whether an offence had been committed. Herbert Smith, the law firm, was particularly supportive of that idea, believing that it would promote and publicise best practice and ease the burden considerably on organisations complying with the alleged offender. Have the Government given any thought to those suggestions?
My second point for consideration is the concern expressed in the submission of the International Chamber of Commerce, which stated that it is crucial that the primary partners in the consultations are the businesses on which responsibility for implementation of the guidance will devolve. As the ICC states, there is a fund of good will from business for simplification and clarification of the law, and a deeper knowledge of the problems and opportunities than any possessed by other stakeholders. It is important that business be accorded adequate time to participate in consultations and, subsequently, to adopt the settled guidance.
In conclusion, I direct the Committees attention to the Secretary of States acceptance of the fundamentals of the amendment on Second Reading:
The guidance will be issued before the Bill comes into force-although not, obviously, before it becomes law-and we will ensure that businesses and organisations representing them have time to digest it before the sections of the Act to which it relates come into force.[Official Report, 3 March 2010; Vol. 506, c. 950.]
I am pleased to see that we agree on the needs of British business in the context of producing the guidance, although I am not sure it is being done in practice. My one remaining concern is that, given the current parliamentary timetable, there is a need to secure that assurance in statute to give business the certainty it needs.

David Howarth: I noticed that the hon. Member for Huntingdon strayed rather a long way from the amendment in his remarks and asked the Minister questions that relate to clause stand part. Would it now be reasonable to continue combining the clause stand part and amendment debates? [Hon. Members: Hear, hear.]

Joan Walley: Whether I give a direction on that as an acceptable way to proceed is a matter for the Committee, given that we now have the letter and the guidance. I am conscious that the hon. Member for Huntingdon spoke specifically to his amendment, so I will be guided by the Minister if she wishes to make a suggestion.

Claire Ward: The amendment is important in the wider context of what guidance there should be, how it will be formed and when it will be available, and the hon. Member for Huntingdon raised those issues. It would be helpful to extend that to deal with clause stand part at the same time.

Jonathan Djanogly: The answer to the question will depend on whether the points I have raised are answered by the Minister in a way that covers what I wanted to cover in the clause stand part debate, and I have yet to hear that.

Joan Walley: My co-Chair, Sir Nicholas Winterton, expressed in his introductory remarks a hope that there would be a degree of collaboration in the Committee. Having allowed the hon. Member for Huntingdon to go slightly wide of his amendment, and in view of what the Minister has said, I think that we can proceed on that basis.

David Howarth: Thank you, Ms Walley. That is helpful. I will speak first to the amendment. The hon. Member for Huntingdon mentioned the speech my noble Friend Lord Goodhart made in the other placeI will not repeat those remarkswhich indicated that in general the hon. Gentleman is making quite a good point. It seems to me that that is a new way of setting up that area of law. The guidance will be important, however it works technically, so it would be a good idea to give businesses some lead-in time to understand their new responsibilities. I think that his general point in that regard is right.
Technically, the amendment is a bit odd because it refers to the coming into force of sections 1, 2 and 6, but not of section 7, which seems peculiar to me. Nevertheless, the general idea is okay and the guidance seems largely to be what was expected. There is obviously more work to be done. For example, the hon. Member for Rugby and Kenilworth referred to a passage in brackets stating that
the application of the guidelines to small companies will need substantial further work.
That is just a note to self, rather than part of the guidance, so clearly it needs more work. It seems to be along the lines we all expected.
The guidance contains many points on process, and that is the key point to grasp. That is one reason why it is reasonable to ask for a lead-in time. If companies are to be asked to conduct risk assessment, for example, that will take time. The guidance is plainly the kind of thing one would expect, with regard to developing written policies and procedures. That seems to be the kind of thing one would expect some time to consider, although the hon. Member for Huntingdon is correct that there is much material out in the world that companies can draw upon and that many companies already use.
I think that the clause should proceed on the present basis. It is a good start towards the guidance that is necessary. I will make one further point on why the matter is about adequacy and not reasonableness. The list of things mentioned in the guidance includes quite a few items that will have a cost to companies. It takes resources to develop policies and undertake risk assessments. The point is that companies cannot pray in aid the cost to say that they should not have to do those things; they must do them. If the test were reasonableness, they might be able to say, We neednt do it, because it might be too costly. That is the important difference between the two. The hon. Gentleman is right that the guidance is about adequacy, not reasonableness. However, it is a good start, and I look forward to the further development of the work.

Jeremy Wright: The issue raised by my hon. Friends amendment is important, as the hon. Member for Cambridge said. It is relevant to quote what the Secretary of State said about the general principle at stake. One would think that it was basic common sense. If we are trying to assist businesses in understanding what is expected of them, particularlyto refer to our previous debatehow to put adequate procedures in place in order to provide themselves with a possible defence under clause 7, we must give them some detail about what they can be expected to consider. It does not seem reasonable to implement the clause without giving businesses some indication of what the measures will be and plenty of notice so that they can comply in good time, especially if, as the hon. Member for Cambridge said, they are structural measures involving substantial changes to how companies do business.
It does not seem that there can be any sensible argument against giving guidance before the offences become relevant. Otherwise, it could lead to convictions. The only question might be how far in advance the guidance should be made available. My hon. Friend the Member for Huntingdon suggested 30 business days. If the Minister disagrees with that period, I have no doubt that an appropriate period can be discussed, but it seems reasonable to me. I hope that, in the spirit of helpfulness that she mentioned, she will accept the amendment. As I said, it seems to be in line with what the Secretary of State said. More importantly, perhaps, it is in line with straightforward common sense.
More widelyyou indicated, Ms Walley, that we may also engage in stand part debate on this clauseit is interesting to read the draft outline. I have had some opportunity to do so, and have quoted it already. I accept what the hon. Member for Cambridge says: none of it is guidance yet, and a lot of it is an indication of the Governments current thinking.
However, even the Governments current thinking gives cause for concern. As I quoted during an intervention on my hon. Friend the Member for Huntingdon, two contradictory things are likely to be included in the foreword:
Stressing the indicative nature and flexibility of the guidance and its relevance to large and small organisations alike.
Either we assist small businesses in understanding what specific measures they, as distinct from large multinationals, need to take, or we produce guidance relevant to large and small organisations alike. I do not see that we can do both. If assisting small businesses with a degree of flexibility is not in the writing of the guidance but in its application, that does not seem to provide the clarity and certainty for which those small businesses will ask and which they are entitled to expect. It is cause for concern.
The draft guidance is the most skeletal of skeletons. It does not give us much help in terms of what precisely will be said, but it outlines a whole list of things that businesses ought to be doing, according to the Governments guidance. The suggestion must surely be that if businesses do those things properly, their chances of being prosecuted for a bribery offence or, at the very least, their chances of succeeding on a defence of having installed adequate procedures must be substantially changed.
Perhaps the Minister can help us with an answer to this question. If the guidance is produced and follows the outline that we have before us and if a business of any size has implemented every single one of the things set out in the draft outline, can it therefore be confident that it has done everything that it needs to do to insulate itself from a bribery prosecution or, at the very least, a bribery conviction? Otherwise, what is it for and what is the adequacy referred to in clause 7?
I do not see what else a business is supposed to do. If it is being asked to demonstrate that it has done whatever it needs to in order to put in place adequate procedures designed to prevent persons associated with the company from undertaking such conductconduct related to briberywhat is it supposed to do other than have a look at the guidance and all the things that the guidance suggests a well run company that is serious about tackling bribery should do? If it completes all those thingsif it does every single one and puts a tick in every single boxis it then entitled to say that it is not at risk of being prosecuted for bribery? It seems not, because also likely to be included in the foreword is the following:
Make clear that the guidance is merely guidance and not a blueprint for companies or a covert regulatory approach; the procedures companies put in place
are
ultimately for them and whether they are adequate will, in the last resort, be a matter of fact for the courts.
At one level, of course that is common sense. In the end, no guidance will be able to specify exactly every single set of circumstances that might arise in every single prosecution.
We come back to the issue of how helpful we are trying to be. Are we saying, Here is a set of things that you as a company may or may not choose to do, potentially spending considerable resource in doing them, but none of them may save you from a prosecution or, indeed, a conviction? It is worth bearing it in mind that for many companies, given the reputational impact of being subject to a prosecution in the first place, it may well be the issue of a prosecution that concerns them, rather than necessarily a conviction. We would make a mistake to assume that all companies would be saved by the fact that they were not going to be convicted even if they were prosecuted. This is at least partly a question of whether a prosecution is instituted in the first place.
What reassurance will the guidelines, when they are eventually fleshed out, provide? There are two questions to be asked. First, why on earth would the guidance not be produced in advance of the offences becoming active? Indeed, what possible argument could there be for not giving a decent period of notice beforehand? Secondly, even if one does all that, how useful will the guidelines be in dealing with the point of adequacy and enabling businesses to do all that they need to do to satisfy themselves that they will not be liable to a prosecution? Those are the two relevant questions to ask in relation to the guidelines.

Oliver Heald: I have some concerns about Government back-pedalling in respect of when the guidance will be published. In the other place, the commitment given was that the guidance would be available well in advance of the new offences coming into force, but the explanatory notes, dated 9 February, merely say that the Government
has indicated its intention to publish guidance ahead of the commencement of clause 7.
There seems to me to be a difference between a good lead-in period and just saying that guidance will be published ahead of commencement. I would welcome the Governments making it clear what is planned.
As the Minister will know, the CBI has stressed that
full and comprehensive guidance is vital. To achieve this...the Government must ensure that consultation with companies plays a major part in its preparation and updating, and that there is a realistic timescale for business to implement the guidance once it has been agreed. We would expect to have a clear commitment on both points from the Justice Secretary
obviously, we have the Under-Secretary before us. That issue does matter. I think that 30 business days is rather modest. I should have thought more than that might be required and I would be grateful to hear from the Under-Secretary what she has in mind for the timing.
Before turning to the point about small business that I have been makingI want to ask some questions about the documentthere is the requirement, of course, to liaise with Scottish Ministers. Clearly, it is important that they should be consulted in accordance with subsection (3), and it would be useful if the Under-Secretary gave us an update on that.
On small business, the Under-Secretary will remember the passage that I highlighted from the report of the Joint Committee on the draft Bribery Bill. There was a lot of agreement that the idea of adequate procedures required amplification through guidance. It noted the need for
the light-touch approach endorsed by the Impact Assessment for small firms in low risk sectors where it may be sufficient to demonstrate that anti-bribery principles have been fully communicated to its workforce.
Many hon. Members would agree that there is a danger for small business, which already has a considerable amount coming down the pipeline. The British Chambers of Commerce estimated recently that there is £26.5 billion worth of regulation in cumulative costs in the pipeline. Small business often says that over-regulation is a disaster for it. It was welcome that the impact assessment said that there would be a light-touch approach for small business in sectors where the risk was low.
Looking at the document that the Under-Secretary has produced, I am concerned that there may be a bit of backsliding there too. It has some of the hallmarks of the gold-plating that Whitehall loves. A small business man would have to feel for the smelling salts as he read the list on page 2 under the title Risk assessment and management. It starts:
Conducting a thorough risk assessmente.g. looking at the risks arising from doing business in specific regions.
If that is designed for big businesses that go overseas regularly, not for small firms in low-risk areas, it is a very different ball game. It would be helpful if this document made it clear that it is not backsliding from the impact assessment and that small business will get a reasonable result.
The part on
Assessing risks of large public sector contracts
is also about large business, as are the words:
Risk mitigationestablishing anti-bribery procedures to deal with the specific risks identified.
If we are talking about major businesses such as British Airways, which is in the news, or British Aerospace, this may well be meat and drink to them. However, for a small business in Hertfordshire that just wants to sell some goods in China, having to go through an onerous, heavyweight procedure suitable for one of the companies with British in its name is not what is required. The document goes on:
Ongoing risk management and monitoring.
That all sounds to me like big business stuff.
The document improves in the section entitled:
Clear and practical policies and procedures.
Perhaps this is the bit for small business. It talks about:
Developing written anti-bribery policies that are effectively communicated to employees and external stakeholders.
That is almost the wording in the impact assessment.
The section entitled Appropriate implementation talks of
Embedding anti-bribery policies into the administrative structure of the organisatione.g. making sure that legal advisers, HR department, training teams, communications department etc. are signed up to new policies.
That sounds like it is talking not of a successful small business in Letchworth trying to sell goods overseas, but of a massive organisation on the international stage.

Jeremy Wright: I agree with what my hon. Friend is saying. Does he agree that we should give specific consideration to new businesses that are setting up afresh because they are likely to be put off by this raft of guidance and legislation?

Oliver Heald: We want new business to be aware that corruption and anti-bribery policies are important. The problem is the scale of what is required for a small enterprise. A small business setting up, which is already being told that there is £26.5 billion worth of regulation in cumulative costs to the nations businesses in the pipeline, will then be faced with this document. Unless it is made clear that small business at low risk may be a different proposition, talk about the administrative structure of the organisation, legal advisers, HR department, training teams and communications departments may put people off. It goes on to state how the procedures would acknowledge the stance and so on. That might be possible in a small organisation, but there needs to be a section in the guidance that makes it clear that what was in the original impact assessment is still important to the Government; namely, light touch where it is right and some explanation of that. I notice, for example, that the front page of the draft outline states that
the application of guidelines to small companies will need substantial further work.
I hope that means that we will get what the impact assessment said, but I would like the Under-Secretary to reassure us, because that is an important issue.

John Howell: I look at this and think back to the start of my business career, and I have to say that I am not sure that I would have bothered. I just do not understand how, under the guidance, one can plan. So much is left to the courts, and we do not know how that will turn out. There is a lot of other uncertainty as well. If I heard the Under-Secretary correctly, the key issue of the parent and subsidiary relationship will be looked at later. The Under-Secretary is frowning at me. Is that not what I heard as regards that relationship, which was going to be looked at by the Law Commission and is now going to be looked at? If she wants to correct me on that, I am happy to acknowledge any misunderstanding.
As I said in an earlier debate, we have a growing body of guidance, both vertically and horizontally. The problem with that level of guidance is that, despite its size, it is never complete. There are always cracks through which things fall and I am not sure how those will be dealt with. The issue of the volume of the burden on small and medium-sized enterprises has been raised, but the advice that they can get and the advice that is out there also needs to be looked at. The access to advice for SMEs is completely different from that for large companies.
To pick up on the last points made by my hon. Friend the Member for North-East Hertfordshire, on page 2 of the draft of a draft, he is right to point out that all the evidence and early indications about risk assessment are meant for large companies. From that point of view, they are not only somewhat detailed but incredibly patronising. I have not come across a large company that would not have undertaken a risk assessment of going overseas that included a whole number of issues, including an assessment of the culturenot just the normal culture, but the business cultureand particularly aspects of bribery and corruption. We have seen that sort of advice provided over the years by the Government through UK Trade & Investment, which provides advice on doing business. I was involved in central and eastern Europe as it came out of its communist period. There were huge issues of bribery and corruption that were absolutely crucial to both small and large businesses who wished to do business there. They turned automatically to UKTI for advice to follow in order to stay clean in that area, and they were given that advice.
The next section, Clear and practical policies and procedures, tells businesses in detail how they will interface with their employees and their external stakeholders, and the sort of communications programmes that they will run. Many large companies will find that level of detail incredible and patronising. The points made about the impact on SMEs have already been made fully and are well worth making.
In the Joint Committee, the issue was raised of Government advice, and of a Government advisory organisation to help businesses with the very things that fall through the gaps. The Joint Committee rejected that suggestion on the grounds that there might be a conflict with cases that were brought later. In that case, we would need to know what practical advice will be given to supplement the guidance when we find things that fall through the cracks. If that rejection applies to a new advisory group, does it also apply to the sort of advice that UK Trade & Investment created and, to my knowledge, still gives at the level of detail that I have indicated? Without wishing to be too pessimistic and negative, I would feel hard done byI was going to say as a big businessman, but that might be taken as too personal a statementas a businessman in a large company because of the patronising nature of the guidance, and as a businessman in a small company I would feel totally bewildered and unable to plan for any operation that I might want to undertake.

Oliver Heald: I do not know whether my hon. Friend noticed, but the CBI today said how helpful an advisory service or a point of reference for business would be.

John Howell: I thank my hon. Friend for mentioning that. I do not feel strongly about whether the advice is provided by a new advisory service or through existing Departments. What we need to know is what the advice will consist of and how it will be delivered. That information is missing from all the documentation we have, and it is crucial to ensuring that the proposals work on a practical level, rather than just at a level that is acceptable to lawyers and academics. People such as me, who have spent their career in business, need to know how to adapt their businesses to meet the Bills objectives.

Robert Syms: I have looked briefly through the guidance outline and a lot of it sounds non-controversial and sensible. To start off with, it says that the guidance will:
Emphasise that it is not the Governments intention to drag down well-run companies for isolated incidents of bribery committed by rogue officials.
That sounds like a sensible approach. Clearly, if a business has repeat offenders there may be a cultural problem, and those offenders may well come to the notice of the prosecution authorities. However, this proposal involves some heavy costsI do not say that it is a bad thing. I think that the most honest place in the world to do business is Finland. It always comes out top, and Canada is pretty high.
We all know that there are parts of the middle east and Africa where there is a problem, and public policy and honesty in the fight against corruption are essential in improving the lot of many of the people who live in those areas of the world. If a business is conducting a risk assessment of whether to do business in a particular area, clearly there is a higher risk in some areas than others. Will it be held against a company if it does business in a high-risk area, or should the risk assessment be about trying to avoid getting caught up in the cultural problems of that area? I see the guidance as saying that if a company does business in a high-risk country or sector, or if it is doing a public sector project, it should beware, because it will get itself into trouble. That may well lead to the conclusion that that is not a place where one wants to go.
One therefore has to consider a number of issues. Are we trying to put businesses off trading in areas where there are problems, or do we want British companies with best practice to get involved in such areas? The consequence of a British company with best practice going to an area where bribery and corruption are endemic is that at some point it will get caught up in the difficulties of doing business there. It is probably better that we do business in those areas and try to raise standards, but I do not believe that we will necessarily move to a perfect situation straight away.
The other thing about due diligence on business partners, employment, business opportunities or business operations in a foreign country is that information is sometimes not forthcoming. Sometimes people lie to businesses. If you ask, Have you bribed anybody this year, Mr. Smith?, the answer may well be no, but his record may be somewhat different. There are difficulties, including with companies keeping blacklists of people. So there is a need for careful thought, and I am sure that the Minister will reassure us with her comments.

Claire Ward: Well, Ms Walley[Interruption.]

Joan Walley: Order. There is a Division in the House. As it has been brought to my attention that the Committee is likely to sit late tonight, I propose to suspend the Committee for an hour, and for food, until 8 oclock.

Sitting suspended.

On resuming

Claire Ward: I think I had got to, well, or something along those lines. I hope that we are all a little refreshed after a dinner break. I will start on a positive note, which is that it has always been our intention to provide as much information to businesses as possible. We understand the issues raised by businesses.
The hon. Member for Huntingdon asked me whom we had met and discussed the matters with. I shall give him an indication of the types of companies and organisations we have engaged with to draw on their experience and expertise on the issues: the Confederation of British Industry, the International Chamber of Commerce, BP, Balfour Beatty, Shell, Transparency International UK, British Telecom, GC100, Institute of Business Ethics, Deloitte, Simmons and Simmons, and the Federation of Small Businesses. I am sure that the hon. Member for North-East Hertfordshire would be pleased to hear about that last organisation in particular.
I have also attended a conference with the AeroSpace and Defence Industries Association of Europe. We are engaging with all those organisations because many of them already have good guidance and procedures in place that they follow to ensure they stay within the existing law. I need to emphasis that, in many aspects of domestic law, bribery is obviously an offence, and it is important that those companies abide by that.
Given the importance that we place on having guidance, I have provided assurances that we would make sure that guidance is in place. Indeed, we introduced clause 9 because we recognised the importance of guidance, which we will make available before clause 7 comes into force. The hon. Member for Huntingdon has tabled an amendment that refers to
at least 30 business days.
I have said in the past that guidance should be introduced well before the commencement of the clause 7 offence. I am sure that the hon. GentlemanI pre-empt him herewill press me and say, What do you mean by well before? I mean well before 30 days. It is my intention to ensure that businesses have as much opportunity as possible to consider the guidance. I accept the spirit of the hon. Gentlemans amendment, which is the need to ensure that businesses have an opportunity to consider the guidance before the offence comes into force. However, on the basis of my comments, it is not necessary to accept the amendment.
Given that we have had an opportunity to extend the discussion to a clause stand part debate, perhaps I can consider the guidance I have provided, which is a draft outline. The guidance is very much at an embryonic stage and is growing rapidly in the sense that we are continuing to have those discussions with business and other stakeholders to ensure that we get it right. That is why, for example, we have stated that the application of the guidelines to small companies will need substantial further work. We recognise that the guidelines will have to be read and considered by large, international, multinational companies, as well as by the small businesses that wish to avail themselves of the guidance. On that basis, we need to make sure that the guidance is appropriate.

Jonathan Djanogly: Will the Under-Secretary explain how the Government intend to disseminate the guidance once it has been agreed? That will presumably take place during the lead up of at least 30 days to which I think she has committed the Government.

Claire Ward: We continue to have that discussion with organisations. Once the guidance is publishedI again make it clear that the Secretary of State is responsible for itit will not require parliamentary approval. Organisations such as the CBI, the ICC, and many of the others that I have already listed with which we are in consultation will have access to the guidance. That will ensure that there is plenty of opportunity for businesses to consider it.

Jonathan Djanogly: Is the Under-Secretary saying that she expects the guidance to be disseminated through business organisations, or will the Government find ways to disseminate it themselves?

Claire Ward: There is a range of ways in which we can ensure that businesses are well aware of the guidance, one of which is to make sure that the organisations with which we are already in discussion are able to pass and disseminate it through their support networks.

Jeremy Wright: May I ask about another aspect? The Minister will correct me if I am wrong, but I think that the regulatory impact assessment refers to the possibility of a lighter-touch regime in low-risk sectors. Is that likely to find its way into the guidance? If not, how might it manifest itself?

Claire Ward: Some of the guidance will apply to some companies, and all of it will apply to others. It is possible that all aspects of the guidance will not be appropriate to some companies.

Jeremy Wright: I understand that. I think that the assessment envisages organisations whose line of business means that bribery is unlikely to rear its head, and such companies might not be expected to meet the same requirements as others. Will companies in a low-risk sector be expected to meet all of the guidances recommendations or will they be limited to a subset?

Claire Ward: Perhaps that would be better answered if I said that there are no obligations for businesses under the Bill. The guidance will simply be available to assist them in ensuring that their procedures are adequate to prevent bribery. We have sought in our discussions with businesses to draw on the existing experience and expertise in aerospace, defence and security, which already have extensive guidance in place. Those companies already know what is appropriate to meet some of the conditions under discussion.
I will now deal with some of the other issues that have been raised. We firmed up our commitment to provide guidance during the Lords stage of the Bill by tabling an amendment, which is now clause 9. The clause specifically requires the Secretary of State to publish guidance on the procedures that commercial organisations can put in place to prevent bribery by persons associated with them. It also includes a provision for the guidance to be updated from time to time at the discretion of the Secretary of State, who is also required to consult Scottish Ministers before the guidance is published.
The hon. Member for North-East Hertfordshire asked what the consultation with Scottish Ministers will amount to. The Ministry of Justice is discussing the drafting of the guidance with its Scottish counterparts. The guidance will then be the subject of consultation with Scottish Ministers before it is published.
We, and all who have so far helpfully assisted in the formulation of the guidance, are of the view that any guidance should not be prescriptive. It is not the role of Government to provide guidance for commercial organisations on how to resist a criminal charge or to provide, in essence, a tick-box approach for organisations on how to stay within the law. Indeed, as the Joint Committee indicated, it is also important that the meaning of adequate procedures is interpreted in a flexible and proportionate way, depending, for example, on the size of the company and the risks associated with the business sector in which it operates.
The ongoing formulation of the guidance that members of the Committee have in front of them this evening draws on the expertise of a wide range of stakeholders. The guidance will set out what organisations can do to prevent bribery. As Members will note from the outline document, we intend for the guidance to highlight key principles: namely, top-down commitment, risk assessment and management, clear and transparent policies and procedures, effective implementation that goes beyond paper compliance, effective due diligence of business relationships and open and accurate reporting, monitoring and review. As the draft outline shows, the guidance will refer to issues such as facilitation payments, corporate hospitality, agents and intermediaries and joint ventures or syndicates to the extent that they relate to the procedures that commercial organisations can put in place to prevent bribery.
We anticipate that the formulation of the guidance will continue over the next couple of months, and we will continue to engage with businesses and stakeholders.

Jeremy Wright: We all understand the Under-Secretarys point about the discretion of the courtsof course it is right. In the end, it will not be possible to present a tick-box list that businesses can simply comply with and give them absolute immunity. However, will she concede that if there was a list of recommendations in the guidance that companies should follow and carry out, companies would have a good defence under clause 7(2) of having put in place adequate procedures designed to prevent persons associated with the company from undertaking acts of bribery? Otherwise, one has to wonder what the guidance is for.

Claire Ward: The guidance is exactly thatit is guidelines to ensure that companies address the issues. However, it would be wrong for me to give an indication. Ultimately, it is for the courts to decide whether a company has ensured that it has adequate procedures in place. The issues that we are covering in the guidance direct the companies to look at specific areasdue diligence, their relationships in joint ventures, whether their procedures are upheld, whether they engage employees in the discussion of the policies, and what sort of guidance they provide to their employees and how to do so. Those are the sorts of things that companies will want to put in place. However, I cannot give any commitment that by simply ticking all those boxes, a court would consider that that in itself was adequate, because there might be other factors that have to be taken into account.
On that basis, I encourage the Committee to support clause 9 and the hon. Member for Huntingdon to withdraw his amendment.

Jonathan Djanogly: We have had a full and helpful debate on the amendment and the clause stand part. The hon. Member for Cambridge said that the cost of compliance cannot be prayed in aid. I agree, but I am not sure that that leads me to agree with him that the reasonable test is not relevant, particularly when it does not yet appear in the draft guidance, as I hope it will. My hon. Friend the Member for Rugby and Kenilworth developed the argument by asking how the guidelines connect with the underlying clause 7 offence. That is a vital issue. I am still concerned that we have not quite got to the bottom of that, but it is a different issue from the lead-in time. It is more a stand part issue.
My hon. Friend the Member for North-East Hertfordshire gave a good justification for the lead-in time and noted how reasonable we have been in suggesting 30 days. He made the important point that it is not just about producing the guidance, but how it is disseminated to companies. He also warned about the hints of gold-plating he saw coming out of the draft guidance, with the possibility of backsliding as a result. We would certainly wish to avoid that.
My hon. Friend the Member for Henley voiced real concerns about how he would feel as an ex-businessman looking at the guidance. This is of great concern, not least because we need to keep in mind the very severe penalties that exist under clause 7. I was impressed by his ability to assimilate the draft guidance in a very short period. Given the timing, we feel totally justified in coming forward with further issues as we see them once we have considered the form of the guidance. In the absence of my hon. Friend I will say that I have tabled an amendment to discuss the advisory service, which was an issue that he said was very important. He need not fear. We will be going back to that.
I pointed out to the Minister that the clause 6 offence was not mentioned in the draft guidance. I think she said in her concluding remarks that it would be.

Claire Ward: May I clarify that? The guidance relates to the clause 7 offence and will relate to the clause 6 offence in as much as it is about procedures operated by the company. The guidance is not specifically about the clause 6 offence.

Jonathan Djanogly: I will have to think further about that one. My hon. Friend the Member for Poole reviewed the draft guidance and made the important point about the need to review high-risk areas. Risk assessments are an important issue to be covered in the guidance and the proportionality resulting from that. I thank the Minister for her full response on this issue. She has started this evenings deliberations on a positive note.

Robert Syms: At least the Minister had the honesty to point out that because her child was ill she could not get on top of the guidance issue. It is difficult with families.
Mr. Djanoglyrose

Claire Ward: I do not wish to labour that point, but I did not say that I could not get on top of this issue. I am fully on top of this issue, but I simply explained why hon. Members had received the letter now compared with the date on which it was signed. I make that point absolutely clear. I am very sorry that the hon. Gentleman sought to lead the Committee along that route.

Jonathan Djanogly: Moving on swiftly, we accept the spirit in which the Minister spoke on the last clause and the confirmation that the lead-in will be at least 30 days. Once we have guidance it will be vital to disseminate it. I did not quite get the feeling that that much thought had gone into that side of things yet. So I would be grateful if she ensured that such preparations were progressed to save us time when we take over in a few weeks time, of course.
The question of what goes into the guidance hangs over this debate. I have already put on record our concerns about how it is being collated and organised, and I will not go into it again. I agree that we want to stay away from a tick-box process on the guidance, which would be counter-productive, but that does not make its content any less important for it to fulfil the adequate procedures purpose of clause 7. With those remarks I am happy to ask the Committees leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 ordered to stand part of the Bill.

Clause 10

Consent to prosecution

Jonathan Djanogly: I beg to move amendment 15, in clause 10, page 6, line 22, leave out paragraphs (a) to (c) and insert the Attorney General.

Joan Walley: With this it will be convenient to discuss the following: amendment 16, in clause 10, page 6, line 27, leave out paragraphs (a) and (b) and insert the Attorney General.
Amendment 17, in clause 10, page 6, line 29, leave out subsections (3) to (5) and insert
(3A) The powers of consent conferred by this section shall be non-delegable by a Director of the organisations specified in subsection (1) and such powers may not be exercised by individuals other than those specified in subsection (1).
(3B) Where consent to proceedings for an offence under this Act is forthcoming under subsections (1) and (2), the organisation whose Director has consented to proceedings will be solely responsible for the undertaking of such proceedings in relation to that alleged offence..

Jonathan Djanogly: Amendments 15 and 16 will allow the Committee to debate the constitutional position of the Attorney-General. Under the law as set out in the Public Bodies Corrupt Practices Act 1889 and the Prevention of Corruption Act 1906, prosecutions for bribery cannot be commenced without the consent of the Attorney-General. However, the Bill gives prosecution powers to the Director of Public Prosecutions, the director of the Serious Fraud Office and the director of Revenue and Customs prosecutions in England and Wales. Amendment 15 would reverse that by reinstating the Attorney-General as the key individual in the prosecution consent process.
We need to review the background to why we have a requirement for consent to prosecute in the law of bribery. In our legal system, some offences cannot be instituted without the prior consent to prosecute of the Attorney-General. Under the law as it stands, prosecutions for bribery cannot be commenced without such consent. So-called consent cases are statutorily created with the requirement for consent to prevent certain offences from being prosecuted in inappropriate circumstances. In a memorandum to the 1972 Franks Committee, the Home Office set out five reasons why certain offences require consent:
To secure consistency in prosecution, e.g. where it is not possible to define the offence very precisely so that the law goes wider than the mischief aimed at or is open to a variety of interpretations; To prevent abuse or bringing the law into disrepute, because the offence is a kind which may result in vexatious private prosecutions; To enable account to be taken of mitigating factors, which may vary so widely from case to case that they are not susceptible to statutory definition; To provide some central control over the use of the criminal law when it has to intrude into areas which are particularly sensitive or controversial, such as race relations; and To ensure that prosecution decisions take account of important considerations of public policy or international nature such as may arise, for example, in official secrets or hijacking.
As a matter of constitutional law, the role of the Attorney-General is also important because ultimately, when making decisions, that person is accountable to Parliament. If the Government wish to tinker with such a constitutional position, they should not do so lightly.
I remind the Committee of the Governments opening remarks in their response to the Justice Committees report on the draft Constitutional Renewal Bill, which was published last July. They said:
the Government is clear that reform is required to clarify the Attorney Generals role and make it more transparent, with the result that public confidence in the role will be enhanced. To that end certain changes have been, or will be, made principally in relation to the Attorney Generals role as superintending Minister of the prosecution authorities. As no change in the law is required to bring about these significant reforms the Government has decided not to bring forward any legislation relating to the Attorney General.
Despite those assertions, here we are eight months later, at the tail end of this Parliament, faced with what amounts to a significant amendment of more than 100 years of constitutional convention. It is little wonder that such a considerable strength of feeling was expressed in the other place about the Governments decision to remove the Attorney-General from a decision-making role in bribery prosecution. It is also worth drawing the Committees attention to the evidence provided by the Attorney-General herself in evidence to the Joint Committee, which is cited at page 59 of that report. She said:
It appears to me that the power of direction and the wider constitutional position of the Attorney General should be addressed in the context of the draft Constitutional Renewal Bill, rather than this Bill.
That led the Joint Committee to say:
Any broader reform of the Attorney Generals Office, including her power of direction, must await comprehensive proposals being pursued in the future.
If we are to realign the role of the Attorney-General, I suggest that this is not the way to do so. If, indeed, it is decided that there is a need to discuss this, there should be a full discussion in the widest context. The Government have a vehicle to allow a full debate on these and many other matters in the Constitutional Reform and Governance Bill, which has only just finished its Committee stage in the House, but in the interim, the role of the Attorney-General should be left as it is[Interruption.] In fact, that Bill has gone to the Lords. However, if the Government want to tinker further with our constitution, they should do so in a constitutional Bill.
The Government will no doubt counter with the argument that the provision was agreed unanimously by the Joint Committee. As Lord Goodhart said on behalf of the Liberal Democrats in the other place:
Volume 1 of the report on the draft Bribery Bill makes reference to the Attorney-General. Paragraph 171 states:
The Attorney-Generals powers of consent and direction raise complex constitutional issues that lie at the heart of ensuring parliamentary accountability for the criminal justice system. We agree with the Government that the power of direction should remain in place without being reformed by the draft Bribery Bill. Since this power will remain in place, we are satisfied that the power of consent should be transferred from the Attorney-General to the Directors of the prosecuting authorities...Any broader reform of the Attorney-Generals Office, including her power of direction, must await comprehensive proposals being pursued in the future.[Official Report, House of Lords, 7 January 2010; Vol. 716, c. 68.]
I will make two responses to that position. First, as Lord Lyell quite rightly noted in the other place, there is an absolute tradition that Joint Committees will always aim to be unanimous. That is why this Joint Committee proceeded on a unanimous basis, even though many members did not support its findings. The Governments statements in the other place suggested that there was widespread agreement on the issue, but they should be seen in that context.
Secondly, why does the transfer of power of consent not count as a broad reform of the Attorney-Generals office, and therefore necessitate comprehensive proposals to be pursued in the future? If the Attorney-Generals powers of consent and direction raise complex constitutional issues that lie at the heart of ensuring parliamentary accountability for the criminal justice system, why are they being given away so lightly in the Bill?
One of the key factors in favour of the need for consent to prosecution is the aim of avoiding vexatious claims, or claims that are not in the public interest. Lord Hodgson intervened most tellingly on that issue in the other place and concisely cut to the heart of concerns that have been voiced, not least by the business community. He said:
This provision envisages at least three routes by which a prosecution can be launched. The danger therefore is of different thresholds of prosecution. Of course, the lawyers will say that the legal grounds are there and that they are statutory, but those in the real commercial world know that interpretations can vary greatly. When we have the additional words with the consent of, that means that yet other people may wish to bring prosecutions and obtain the consent of the three bodies listed.
Those of us who have been involved in commercial activity will know of companies that have got across some of the bodies listedin particular, HMRC. There may be a situation where a firm has done something with which HMRC disagrees and it may even have brought a prosecution and failed in its endeavours, but that means that that firm will then be marked by HMRC as a body whose future activity should be considered carefully. There is a real danger that in these circumstances people will find themselves being lifted up the scale for consideration for prosecution in connection with the activities considered under the Bill.[Official Report, House of Lords, 7 January 2010; Vol. 716, c.GC70.]
It is for that very reason that we think that the Attorney-General should be in place as a safety valve, so to speak. It is not as helpful to have in place an individual who is unaccountable to Parliament in the form of a director of one of the prosecuting authorities detailed in the Bill. It is an established strength of our system that a Law Officer as senior as the Attorney-General is directly answerable to Parliament. It is to Parliament that the Attorney-General must come to answer difficult questions about difficult decisions. Is this change being made because of criticism that a member of the Government cannot be trusted to exercise untainted discretion? Those questions have been raised by partners in the OECD, as well as by the Liberal Democrats. However, that is simply the way that our constitution is, and the Government should be legislating within our constitution and not running scared of it. The criticism that a member of the Government cannot act impartially should be proved incorrect and not acceded to. It is important that a person making decisions in this area should be accountable to Parliament, because that is where there can be proper independent scrutiny and accountability regarding such decisions.

Jeremy Wright: If the Government were of the view that my hon. Friend described, would it not be much more satisfactory for them to address the issue of the Attorney-General in the round and come forward with some wholehearted reforms of the post itself?

Jonathan Djanogly: I absolutely agree with my hon. Friend that whatever the Government have done in relation to other legislation recently, they have pulled back from addressing the wider issue of the Attorney-General. However, this proposal is poking out like a pimple when it should be dealt with, as my hon. Friend has just said, in a constitutional sense. Ideally, it should be dealt with on the Floor of the House, as it is a constitutional matter, rather than being picked off here in the Bill. Although it is not the Government who prosecute an offence but the independent prosecuting authorities, it is important that someone who is answerable to this House or another place should have ultimate responsibility for that process of prosecution.
We believe that the OECDs observation on this matter shows what is driving the Governments desired changesthe idea that someone who is intimately concerned with the Government cannot be trusted to decide matters of criminal prosecution independently. We say that our constitution has preserved the role of the Attorney-General for centuries longer than we or the OECD have graced such discussions. If we subscribed to the idea that people in government cannot be trusted to take independent decisions, it would be of little surprise if the public found it possible to take that view. Therefore, we believe that it is of vital importance to preserve the role of independent Law Officers who are accountable to Parliament. We suggest that we should not give way on our constitutional principles and that we handle these matters in the manner that has prevailed in some other countries. We have no doubt whatsoever that the Attorney-General is the proper person to account to Parliament in relation to this very important area in the Bill.
The Government said much in the other place about the support for the arguments put forward by outside stakeholders, including Transparency International UK and the OECD, which we believe have sought to discredit the office of the Attorney-General and the ability of the incumbent to distinguish between party politics and impartiality. Transparency International has been particularly vociferous in its criticism, suggesting that the Attorney-General was not only incapable of impartiality, but incompetent. If I may quote from its briefing paper, which was circulated yesterday, I think that that view will be self-evident. It said that our amendments:
fundamentally impaired an entire Bill, taking the law back to the discredited system of political interference in prosecution, in conflict with the United Kingdoms treaty obligations. They would replace the need for consent to prosecute from the competent officials making such decisions in the normal course with that of the Attorney-General.
Well, we are British, and I am proud of that fact. We administer our law according to our historical constitution and our values.
In the other place, Lord Lyell spoke most convincingly of the continuity of the current role of the Attorney-General. He said:
The vital matter is that, when the Attorney-General takes any decision in the public interest, he is not acting as a party politician. If he or she were to allow themselves to act as party politicians, they would break the whole tradition and background of the office. It is not party considerations or the party interest that the Attorney-General or the Solicitor-General is considering; it is the public interest. Prosecution decisions par excellence are taken entirely in the public interest. Speaking personally, I have never had the slightest difficulty in knowing the difference between public and party interest and I believe that I never had the slightest difficulty in following the public interest.
What is more, if an Attorney-General or a law officer strays from the narrow path that it is their absolute duty to follow, they are answerable in Parliament directly; indeed, they can be very severely criticised and should recognise that. To a far greater extent than the Directors of Public Prosecution, although they are excellent people who sometimes come before Select Committees or Committees of this House or the other place, the law officers of the Crown are by tradition Members of one House or the other...and are answerable as such.[Official Report, House of Lords, 2 February 2010; Vol. 717, c. 154.]
Our concerns and the reasons behind the amendment are threefold. First, if the Attorney-Generals constitutional role is to be amended in the fundamental way proposed by the Bill, it needs to be done in stand-alone legislation that can be properly assessed from a constitutional point of view. It should not be tacked on to a Bill that is being rushed through the House in a desperate attempt to get it on to the statute book in the dying days of this Government.
Secondly, the Attorney-Generals position as a decision maker who is accountable to Parliament should not be idly dismissed. We are concerned that, by delegating power to the directors, there is a danger that we will lose that accountability.
Thirdly, we should not be so ready to bend over backwards at the behest of external stakeholders. The institutions of this Parliament have outlasted almost all others in the world. We should not take at face value assertions that the Attorney-General cannot act independently as a Law Officer. We put great store by the qualities of the individuals who hold such office and their ability to act independently in the public interest, unconstrained by party politics. If we are seriously to question such fundamental issues, let us do it on the Floor of the House in our consideration of a clear, well-stated piece of legislation that provides for full and frank debate, rather than in a rush in Committee before an election.
The grouping of the amendments means that I have to speak to amendment 17 as well as the provisions relating to the Attorney-General, although I can see why they were grouped in such a way, given the link between the two matters. The office of the Attorney-General originated in 1315, when the Crown began to appoint an individual to prosecute its business in the Court of Common Pleas. This appointment was usually by Letters Patent under the Great Seal, and it has been through a great number of changes since, but one thing has remained consistent: accountability to Parliament.
The office of Attorney-General was summarised succinctly in the other place by Lord Lyell, who said:
if an Attorney-General or a law officer strays from the narrow path that it is their absolute duty to follow, they are answerable in Parliament directly; indeed, they can be very severely criticised and should recognise that. To a far greater extent than the Directors of Public Prosecution, although they are excellent people who sometimes come before Select Committees or committees of this House or the other place, the law officers of the Crown are by tradition Members of one House or the other-as far as possible preferably of the other place-and are answerable as such.
Not enough importance has been placed on the accountability element in the provisions that we are discussing. Lord Bach sought to justify that when he said:
It is the Governments view that this is the appropriate level at which decisions for these offences should be taken. I remind the House that these directors already exercise the consent function in respect of a number of other offences, and the vast majority of prosecutions take place without any involvement by the Attorney-General. As some noble Lords have commented, bribery cases will not normally hold such significance and sensitivity to be of national interest.[Official Report, House of Lords, 2 February 2010; Vol. 717, c. 154-157.]
A note was published by the House of Commons Library in April 2009 to deal with the Bill as it then stood. It stated that, between 1997 and 2003, the average number of prosecutions each year for the offence of bribery was 21. That is a low figure, especially when considered alongside the average number of prosecutions for the offence of fraud in the same years, which was in the order of 23,000. However, companies involved in those cases are household names. Given the number of cases and the reputations of the companies involved, such cases frequently hold the significance and sensitivity to be of national interest. As such, the power of consent to prosecution should not be withdrawn from the Attorney-General. However, in the unfortunate event of that happening, clear provision should be made in the Bill to ensure that there is no further slippage down the prosecutorial ladder.
Amendment 17 would prevent the directors of prosecuting agencies from transferring their powers under the Bill to others within their organisations. It is vital, especially when considering the number of bribery cases, that consent to prosecution remains in the hands of those who can be held accountable. Furthermore, the amendment should go some way to addressing the concerns of Lord Hodgson about the problem of prosecution creep, which I discussed earlier.
On a commercial level, it is important that businesses concerns that they will be the target of over-zealous prosecutors, or the subject of extended and invasive investigations, are put to rest. Just as the original consent requirement was introduced to avoid vexatious claimants, there is a concern among some that, without proper restrictions in place, the decision to prosecute will be wielded by those too far down the prosecutorial ladder with the result that certain businesses are targeted as a result of their being on the radar of Her Majestys Revenue and Customs or others. That is the theme that is echoed in proposed subsection (3B) in amendment 17. Those who start a prosecution should see it through to a conclusion. It should not be possible for prosecuting agencies to swap cases between themselves as they see fit, as that could lead to inherent inconsistency and uncertainty for business.
In the light of many of our debates this evening, I am becoming more worried that we do not yet have adequate procedures in place to decide who will prosecute and the extent to which directors may knock down decisions to subsidiary members of their organisations. Given that, in any event, there are only about 20 prosecutions a year, one would have thought that that would not be necessary. However, if it is, we will need to know how the system will proceed.
If Attorneys-General do not retain the rolewe hope that that they willand we move to what is in the Bill, many serious questions about implementation will need to be answered. The Government must recognise that business is very concerned about the issue, and that if it is not dealt with, different organisations will be looking at prosecutions based on different rationales, which could damage business confidence.

David Howarth: I strongly oppose the hon. Gentlemans proposals, especially those involving the Attorney-General. In fact, I take the exactly opposite view to his. I agree that the Attorney-Generals position should have been resolved in the Constitutional Reform and Governance Bill, but regrettably it was not. In fact, it was never discussed during any stage of that Bills passage. What the Government proposed in that Bill was a far more radical separation of the Attorney-General from any role in prosecutions and decisions than they had proposed in their previous draft.
The proposals in the Bribery Bill do not go far enough to separate the Attorney-General from the prosecution system. In my view, leaving the role of Attorney-General as it is, so that the Attorney-General continues to be the superintendent of the Director of Public Prosecutions, the director of the Serious Fraud Office and so on, leaves in place a system of dubious international legality. It is clear that the system that the hon. Gentleman prefers, in which the Attorney-General has the consent powernot just the superintendence of the DPP and the director of the SFO, but the consent power personallywould certainly be in violation of our international obligations. The hon. Gentleman quoted Transparency Internationals document on this aspect of the Bill. He quoted it accurately, but I agree with it and he does not, so I shall quote it a bit more of it. It says that the putative justification for having the Attorney-Generals consent as part of the law was supposedly
to prevent irresponsible private prosecutions. It has been evident for years that the power to withhold consent had no purpose other than for political, commercial or other inappropriate expediency. The OECD Working Group on Bribery, in successive formal reviews of the UKs
non-performance
of its obligations under the Anti-Bribery Convention, has pointed to this as being...contrary to the Convention, a view reinforced by the conduct of the then Attorney General in relation to the decision to abandon the criminal investigation of the Al-Yamamah project and in relation to the loans-for-honours affair. The Government...accepted that the practice had to change; and the Bill formally transferred the power of consent to the three...Directors.
That is absolutely right. Maintaining the power to refuse to consent to bribery prosecution in the hands of a politician fundamentally undermines our position internationally. What is the purpose of that? What does it look like to the rest of the world? It looks like a Governmentof whom the hon. Member for Huntingdon hopes to be a memberwho would find it important that they could do favours for their mates in the commercial world. The hon. Gentleman might not like that way of putting it, but that is what it would look like to the rest of the world, so he has to take that into account.

Jeremy Wright: Is not the response to the hon. Gentleman that, were an Attorney-General of a Government of any political colour to do as he suggests, heor whoever replaces himwould be able to hold them to account, as part of the democratic process?

David Howarth: I do not want to get into a general constitutional debate, but that is fundamentally complacent about what really happens in politics in this place. The holding to accountthe asking of a few questions by Back-Bench Members of Parliament, which Ministers then deflect and refuse to answeris not in my view a substitute for a proper legal system. In a way, that is the fundamental problem.
By the way, the hon. Member for Huntingdon said that Attorneys-General could separate in their own minds the questions of legality and politics, and they could do both jobs. That is precisely the point that the OECD doubts. If that were true, we would have seen far more Attorneys-General from parties other than the ruling party, or from no party, than we have seen for as long as anyone can remember. The actual number is zero. No Attorney-General has been appointed from outside the ruling party. It is fundamentally a political appointment. The role is so political that it is highly sensitive, which is why it should be separated out.

Jonathan Djanogly: The hon. Gentleman seems to be confusing the nature of the political appointment and someone being able to take a judicial decision based on non-political grounds.

David Howarth: That is an extraordinary idea. That could be applied to the judiciary and one could say that the ruling party should appoint all the judges from their own party and that would be fine because they will be able to separate in their own minds the political and the judicial aspects of their job. It is complete nonsense.
I concede one point, as I mentioned earlier, which is that it would have been better had the whole matter been dealt with comprehensively in the Constitutional Reform and Governance Bill. There is a fundamental point about whether the prosecution function is an Executive, Government function or more of a judicial function. I tend to the view that it obviously has elements of both, but it should be seen more as a judicial function than has been traditional in this country.
Given that we have not had that comprehensive reform, it is much better to have the separation of the political and judicial role as much as we can, whenever the opportunity arises. The opportunity arises in the Bill in a specific context, in respect of which this country has been in serious trouble internationally for many years, and I urge the Government not to give way on that.

Jeremy Wright: I want to ask the Minister about one aspect of the Joint Committees report that she might be able to help the Committee with. I endorse what my hon. Friend the Member for Huntingdon said about the delegation of each of the directors to, at the moment, any official whom they may think fit. I note in passing that the Joint Committee thought it more appropriate that a senior post-holder should be nominated to do that. There is no mention of seniority in the Bill. In particular, will she tell us how the Government will deal with the point raised about section 53 of the Serious Crime Act 2007 and the apparent contradiction that the Bill as it stands would create?

Claire Ward: Perhaps I can ask the hon. Gentleman a question: are the Opposition seeking for responsibility to lie solely and personally with the Director of Public Prosecutions, for example, or do they think that that could or should also be exercised be a senior official?

Jeremy Wright: No, we take the view that that should be the responsibility of the director himself or herself, as it is an important decision. As my hon. Friend the Member for Huntingdon said, it is not an onerous responsibility, given the volume of cases involved, and we think that that should remain in the hands of the director.
I look forward to the Under-Secretarys answer to the question I had finished asking.

Claire Ward: We move on to the matter of consent to prosecution for an offence under the Bill. The amendments offer two alternatives to the provisions in the clause. Amendments 15 and 16 would require the prior consent of the Attorney-General before commencing proceedings for the new bribery offences. Amendment 17 accepts that the consent function should be exercised by the director of the relevant prosecuting authority but seeks to prevent the director from delegating the function. It would also make the prosecuting authority whose director consented to the prosecution solely responsible for the proceedings.
The clause currently provides for the responsibility for giving consent to be exercised by the directors of the relevant prosecuting authorities. We consider it right to retain a consent provision for the new bribery offences and that that should be exercised by the directors, rather than the Attorney-General.
The hon. Member for Huntingdon takes the opposing view and, in so doing, wishes to retain that role for the Attorney-General. He has cited the historic and constitutionally important role of the Attorney-General in those matters and the need to maintain effective parliamentary accountability for the operation of the prosecution services. Interestingly, he is seeking to ensure that there is, as the hon. Member for Cambridge said, essentially a political appointment role within those proceedings, much against the recommendations of the OECD.
Rather worryingly, I am again agreeing with the views expressed by the hon. Member for CambridgeI hope we will not make that too much of a custom. Although we disagree with retaining the Attorney-Generals consent for the offences in the Bill, we do not question the distinguished service given by former Attorneys-General or the independence with which they exercised their powers in the past. It was the 2003 Joint Committee on the draft Corruption Bill that originally questioned the need to retain the requirement for the Attorney-Generals consent for those offences, stating that
without doubting the independence of the Attorney-General and his predecessors, we accept that the appearance of ministerial involvement in the prosecution decision would best be avoided.
I suggest that that is rather clear.
The Law Commission and the most recent Joint Committee, on which the hon. Members for Huntingdon and for Rugby and Kenilworth both served, was similarly satisfied that the power of consent should be transferred from the Attorney-General to the director of the relevant prosecution authority. That view is shared by, among others, the OECD and the Council of Europes monitoring body, GRECO. The directors already exercise the consent function is respect of several other offences, and the vast majority of prosecutions take place without any involvement of the Attorney-General.

Oliver Heald: I hope that this will not cause too much agony for the Under-Secretary, but one of the concerns the Joint Committee looked at was how the directors will be held to account. It is true that at the moment, the Attorney-Generals general power of direction means that even if consent is not being given, the Attorney-General can be held to account in Parliament for the general operation of prosecutions, so there is an element of accountability under the system even though the consent is going. However, if we went as far as the Lib Dems would go and stripped away the powers of direction and superintendence as well, we would end up with no accountability at all for those directors. They are not judicial, as they are in some countries. They are not directly elected, as in America, so how will they be held to account?
It is worth noting that, with the BAE Systems incident that was criticised by the hon. Member for Cambridge

Joan Walley: Order. I hope the hon. Gentlemans intervention will be short.

Oliver Heald: I am just finishing. That decision was actually made by the director of the Serious Fraud Office and was simply approved by the Attorney-General.

Claire Ward: A protocol exists between the Attorney-General and the Director of Public Prosecutions. It is possible in those rare circumstances for the Attorney-General to consider the decision, especially in respect of national security. The director has already exercised the consent function in respect of several offences, as we know. Many such cases raise difficult and complex issues, and always require the directors to consider the public interest in pursuing a prosecution. Our conclusion is that the directors are fully capable of exercising the consent function in relation to the new offences under the Bill.
We do not dismiss the arguments about the need for parliamentary accountability for such important decisions, but we believe that such accountability will continue to exist through the Attorney-Generals significant statutory role in superintending the main prosecuting authorities. That is also reflected in the protocol between the Attorney-General and the prosecuting authorities. The protocol that was published last July sets out the circumstances in which the Attorney-General will or will not be consulted, and how the Attorney-General and directors will engage with one another. It serves to underline the fact that the directors of the prosecuting authorities exercise their statutory functions under the superintendence of the Attorney-General, who is responsible to Parliament for the directors functions in relation to prosecutions. In turn, the Attorney-General is responsible for safeguarding the independence of prosecutors in making prosecuting decisions.
The Attorney-General made the point when she gave evidence last June to the Joint Committee that considered the draft Bribery Bill. She said that
accountability will remain because, so long as the Law Officers, that is the Attorney General and the Solicitor, remain the supervisors and superintendents of the prosecutorial authority, there is a vehicle through which that accountability can take place.
As reflected in the protocol, the Attorney-General will also retain an exceptional power to give a direction in relation to any case that threatens national security, in which case the protocol requires the Attorney-General to report to Parliament. That is appropriate because the Attorney-General, after consulting other Ministers and not necessarily the prosecuting authorities, will have the significant and relevant expertise when national security is at stake.
To return to amendment 17, we do not accept that precluding directors from delegating the consent function in relation to offences under the Bill, even in limited and appropriate circumstances, would be the right way forward. As the Attorney-General said in her evidence to the Joint Committee on the draft Bill, there needs to be some flexibility in the organisation to enable it to deal with matters appropriately. That is why I asked the hon. Member for Huntingdon whether such measures should be exercised by the Director of Public Prosecutions or named senior individuals, the Director of Public Prosecutions and his or her deputy and other named individuals, or just the Director of Public Prosecutions.
In her evidence, the Attorney-General went on to note:
These issues are very important, so one would expect that, if the matter were to be taken by a Director or the DPP or otherwise, there would be an appropriate degree of seniority in taking that decision.
In our view, to require that consent for the offences under the legislation should always be given by directors personally would be unnecessarily inflexible, compared with the existing statutory powers of delegation for the Director of Public Prosecutions.

Jeremy Wright: Unfortunately, the Bill as drafted does not regard what either the Under-Secretary or the Attorney-General said as desirable. Nor does it say that delegation would happen only in limited or appropriate circumstances, nor that the person to whom the delegation was made should have an appropriate degree of seniority. Will the Under-Secretary explain why those measures are not covered under the Bill?

Claire Ward: The power of the Director of Public Prosecutions extends to the other prosecutors through the Crown Prosecution Service. It does not have to be held directly by the DPP personally. The amendment, however, requires that action to be performed solely by the directors. I was seeking clarification from the hon. Member for Huntingdon about whether he saw that as a specific requirement, or whether the power should be exercised by a Director of Public Prosecutions and his deputy or other named senior officials.

Jonathan Djanogly: As the Bill stands, there will now be three people instead of one, so there are already three times as many people taking the decision, even without delegation. The additional concern is about the grounds on which prosecutions will be based, and the fact that if three people will be doing a job that is now done by one person, a difference of policy could creep in.

Claire Ward: Perhaps I can direct the hon. Gentleman to clause 10(5):
Subsections (3) and (4) do not affect other powers of a Director to authorise a person to exercise functions under subsection (1) or (2).
The Attorney-General gave the view that that authorisation would be at senior level, and we see no need for that detail to be in the Bill.

Oliver Heald: Is that not all rather lazy? There are only 20 cases a year. Can the directors not pull out their fingers and get the work done?

Claire Ward: I do not think that that is a helpful intervention. It suggests that the Director of Public Prosecutions or the director of the Serious Fraud Office is for some reason not undertaking their full responsibilities. I simply seek to question whether the purpose behind the hon. Gentlemans amendment was to restrict the power to those three individuals

Jonathan Djanogly: Yes.

Claire Ward: Or whether he sought to extend it to deputies or named individuals.

Jonathan Djanogly: No.

Claire Ward: That matter has been clarifiedthe power is simply with the three of them.
Under section 1(7) of the Prosecution of Offences Act 1985, where the consent of the DPP to institute proceedings is required, that consent may be given by a crown prosecutor. Section 37 of the Commissioners for Revenue and Customs Act 2005 permits the director of Revenue and Customs prosecutions to designate members of his office to exercise any of his functions, as they relate to the institution and conduct of criminal proceedings in cases investigated by Revenue and Customs. We have provided a similar power in clause 10(3) for the director of the Serious Fraud Office to delegate the function of giving consent to a member of their staff authorised for that purpose by the director. Powers of delegation are provided for the Director of Public Prosecutions for Northern Ireland under section 36 of the Justice (Northern Ireland) Act 2002. We therefore take the view that the existing statutory arrangements for the delegation of directors functions and those provided for the SFO under clause 10 will allow the directors to ensure an appropriate degree of seniority when consent is given to a prosecution under the Act, in keeping with the views expressed by the Attorney-General to the Joint Committee.
The hon. Member for Rugby and Kenilworth mentioned section 53 of the Serious Crime Act 2007. That issue was raised by the Joint Committee, and has been dealt with in the Bill. If the hon. Gentleman would like to refer to schedule 1, paragraphs 12 to 14, he will see that that provision removes the inconsistency. On the basis of those comments, and the clarification that the hon. Member for Huntingdon has given me, I urge him to withdraw the amendment.

Jonathan Djanogly: First, to the hon. Member for Cambridge, the question of the role of the Attorney-General is, I totally accept, an issue on which strong opinions are held by different people. I do not think that we shall resolve that one between us this evening. The hon. Gentleman said that the Liberal Democrats want to remove the Attorney-General totally from the prosecution system, but we do not agree. Given that that is not suggested in the Bill and we are being offered only piecemeal reform, as he acknowledged, I argue that it is logical to keep the status quoeven from his point of view, at this stageso that the issue can be reviewed in its entirety as part of a constitutional Bill on the Floor of the House at some time in the future.

David Howarth: Will the hon. Gentleman give way?

Jonathan Djanogly: The hon. Gentleman is going to say that he will be sorry not to be here to see it.

David Howarth: No, I want to remark that that is a classic example of the famous academic argument that the proposal will block the way for more radical reform later. It was always a bad argument in the university.

Jonathan Djanogly: It sounds like a good conservative maxim to me.
The Minister referred to the agreement of the Joint Committee, but I was there, my hon. Friend was there and, most importantly, Lords Lyell and Mayhew were theretwo distinguished past Attorneys-General, and I can assure the Minister that they were not supportiveso I suggest that she does not rely too heavily on the unanimity of the Joint Committee in that instance.
The issues are difficult and complex, so we believe that there is a role for the Attorney-General. Issues that involve national security, for instance, are exactly the sort of issues that would benefit from having the Attorney-General there still.
The Under-Secretarys comments on directors delegating powers did not give us much, if any, additional comfort. As my hon. Friend the Member for North-East Hertfordshire rightly said, with 20 cases a year, that is about six cases a piece between the three of them, so we believe that they should be taking the decisions themselves.
On that basis, at this stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Claire Ward: I beg to move amendment 25, in clause 10, page 6, line 37, leave out subsections (6) to (14).

Joan Walley: With this it will be convenient to discuss Government amendments 26 to 30.

Claire Ward: With this group of amendments we come to what has proved to be the most difficult aspect of the Bill, namely the defence for the intelligence services and armed forces found in clause 13. I say difficult, because I do not dispute that the arrangements for oversight of the intelligence services and armed forces are properly a matter for public and parliamentary debate, in particular when, as in the Bill, legislation will sanction such conduct by those organisations which, if committed by anyone else, would be unlawful. The question with which the other place grappled and which now falls to the Committee concerns where the balance lies between ministerial accountability for what are operational decisions by the intelligence services and armed forces and the need to maintain operational effectiveness and flexibility.
For the reasons that I shall set out, the Government firmly believe that the amendment passed on Third Reading in the other place, and which now forms subsections (6) to (14) of clause 10, does not get the balance right. We accept, however, that the other place has expressed a legitimate concern and we do not propose, therefore, to invite the Committee simply to strike out those subsections. Instead, the amendments to clause 13 in this group offer an alternative model for providing an appropriate level of ministerial oversight.
In setting out the case for the amendments, I shall first explain why the provisions in subsections (6) to (14) are fatally flawed. I do not argue that a ministerial authorisation scheme is, of itself, unacceptable to the Government. As the Committee knows, the Government put forward such an authorisation scheme in the draft Bill published last spring, but that scheme was a very different beast from the one in clause 10. There are a number of important differences.
In the draft Bill, the Government proposed what was, in effect, a mandatory authorisation scheme. The draft Bill proceeded on the basis that conduct that would otherwise constitute an offence under the Bill by persons acting on behalf of the intelligence services did not, in fact, constitute a bribery offence if it had been authorised by the Secretary of State. By excluding such conduct from the ambit of the offences in the Bill there was no need for a defence.
In contrast, we now have a discretionary authorisation scheme that retains the defence in clause 13, and far from having the best of both worlds, we have a muddled hybrid scheme that is neither one thing nor the other. One of the primary purposes of clause 13 is to provide assurances to members of the intelligence services and armed forces that they will be protected in the event that they have to engage in conduct that would constitute an offence under the Bill. In practice, the very existence of the defence means that it is highly unlikely that a member of the intelligence services or the armed forces would ever face prosecution for an offence under the Bill, because a prosecutor would take the availability of the defence into account when deciding whether there was a realistic prospect of securing a conviction.
In the unlikely event that a prosecution was brought, the person concerned would be able to avail himself or herself of the defence. The comfort provided by the defence is considerably dissipated by the discretionary authorisation scheme. In any case in which the conduct in question had not been subject to a prior authorisation, the question would inevitably be asked, Why not? Whatever the intention of the drafters of the Lords amendment, there would inevitably be heightened suspicion in any such case. Prosecutors would be more likely to contest a claim that the defence operated in the particular case and a jury might be more likely to convict. I ask hon. Members to put themselves in the shoes of a member of the intelligence services or armed forces in that situation. They would regard the defence as devalued and insist on an authorisation in all circumstances.
If we were to have an authorisation scheme, it would not be the one in clause 10. The drawback with that scheme is that it requires that conduct be specifically authorised by the Secretary of State. That is tantamount to a case-specific authorisation scheme. Such a scheme poses significant practical difficulties that would make it unworkable. It could potentially place heavy demands on the Secretary of State due to the number of separate authorisations required. Moreover, a case-specific authorisation scheme simply fails to recognise the dynamics of what can be complex and fast moving operations. One only has to consider military operations in Afghanistan to recognise the impracticality of a case-specific authorisation scheme. Such difficulties could be remedied by also providing for a class-based authorisation schemeindeed, our draft Bill contained such a schemebut that is not the complete answer. A class-based authorisation would, by definition, necessarily cover a wide range of conduct in a wide range of circumstances.
Those issues led us to conclude that the defence in clause 13 has a number of advantages over an authorisation scheme. The defence is more focused and case specific, without the drawbacks of a case-specific authorisation scheme. It relates to specific conduct by an identified individual.

Jonathan Djanogly: The Under-Secretary says case-specific, but would it not still be possible to have a group of issues in one case, so that only one authorisation needs to be given?

Claire Ward: The hon. Gentleman appears to be describing a class authorisation. That is the distinction and I have already set out why there would be a difficulty with class authorisation.
The defence in clause 13 relates to specific conduct by an identified individual and the application of the defence would need to be considered on a case-by-case basis.
Finally, it is worth noting that the amendment made in the other place would allow the Secretary of State to authorise conduct that would constitute an offence under clause 6, namely, bribery of a foreign public official for a business purpose. We have taken great care in drafting clause 13 to ensure that it is compatible with our international obligations. To that end, the definition of a relevant bribery offence purposely excludes a clause 6 offence. Such a defect could, of course, be remedied, but the other fundamental flaws that I have outlined are not similarly capable of being rectified.
Consequently, we must strike out the offending Lords amendment. As I have indicated, we do not propose to leave it at that. The other amendments to clause 13 in this group would provide an alternative mechanism for ministerial oversight.
The key amendment is amendment 27, which places a duty on the heads of the three intelligence services and the Defence Council, in respect of the armed forces, to make sure they have arrangements in place that are designed to ensure that conduct amounting to a relevant bribery offence takes place only where the defence would apply. Those arrangements must be ones which the relevant Secretary of State considers satisfactory. This introduces a significant measure of ministerial oversight while ensuring that such oversight can be exercised proportionately without undermining the operational effectiveness of the intelligence services and armed forces.
The effect of amendment 27 is that the arrangements put in place by the heads of the intelligence services and the Defence Council must be ones with which the relevant Secretary of State is satisfied. Moreover, the requirement for the Secretary of State to be so satisfied is an ongoing requirement. This is neither a tick-box nor a one-off exercise. The Secretary of State will need to make a qualitative judgment on the arrangements and decide whether they are satisfactory. If he considers that they are in some way unsatisfactory, the head of the relevant intelligence service or the Defence Council would need to address his concerns and resubmit modified arrangements.
As the duty on the Secretary of State will be an ongoing duty, it would be necessary, for example, for him to review any proposed changes to the arrangements before they take effect and to confirm, or otherwise, that the revised arrangements are also satisfactory. The amendments purposely avoid specifying what form the arrangements must take or what they must cover. That is properly a matter for the heads of the intelligence services and Defence Council, subject to sign-off by the Secretary of State that the arrangements are satisfactory.
The amendments make it clear that it will be the responsibility of the head of each of the intelligence services and of the Defence Council to design arrangements that will work most effectively for their staff and operational activities. They would be devised taking full account of the new law as it affects each organisations role, statutory remit and operational activities, and would be submitted to the relevant Secretary of State for his or her approval. If would, of course, be open to the Secretary of State to indicate that more or different arrangements were required. Beyond that, it is not possible for me to say more without commenting on what is a matter for the individual service heads and the Defence Council.
However, it may assist the Committee if I give a flavour of what the arrangements might cover. They might, for example, include internal guidance on the offences in the Bill and the clause 13 defence, and the taking of internal legal advice in specified circumstances. The Committee will understand that by the very nature of such arrangements, addressing as they will sensitive operational matters, it will not be possible to put them into the public domain.
I have set out the amendments in some detail. It is right that I should do so, given the legitimate concerns that have been expressed about clause 13. We will come to a stand part debate on clause 13 in due course, but the Committee should be in no doubt that the Government regard the clause as a core part of the Bill. I share the widespread desire to see the Bill reach the statute book before the election, but the Bill that we pass must be fit for purpose and not jeopardise the operational effectiveness of the intelligence services and our armed forces.
Hon. Members are right to press for proper oversight of the circumstances in which the intelligence services and armed forces might need to engage in conduct which would constitute an offence under the Bill, but this is not the occasion for a general debate on the accountability of the intelligence services. The amendments and the Bill deal with the narrow question of bribery, and the Government amendments provide an equitable way forward. I invite Opposition Members to support the amendments and not to let this issue derail passage of the Bill. I commend the amendments to the Committee.

David Howarth: The Minister is right to say that this is a difficult and delicate problem, and that there are legitimate concerns on the part of the intelligence services and the armed forces. I do not want to get into the principle of clause 13 until we have reached it. My preference, like that of my noble Friends in the other place, would be to leave out clause 13 altogether, but now is not the time to explain why.
Lord Thomas of Gresford said in the other place that there are basically four ways of dealing with the problem. One is to have a statutory defence for such organisations, as in clause 13. Another is to have prior authorisation, as in clause 10. The third, which Lord Thomas offered as a compromise and which was never discussed, was to redefine the offence so that in the circumstances it would not be an offence at all. That was offered in the spirit of compromise, but it is not a compromise I am fond of, and we have now passed the point in the Bill where it could have been proposed. The fourth possibility would be to have nothing of that sort in the Bill at all and to leave out clause 13 altogether.
It seems to me that if I cannot have my first preference, which is to leave out clause 13we will come to that laterthe Government are, I reluctantly concede, unfortunately right about what should be in clause 10. If there is to be a statutory defence, including prior authorisation as well would lead to enormous complications, so perhaps the best way forward is the one proposed by the Government, which is to combine the statutory defence with other procedures to ensure that the issues, especially the issue of necessity, are decided properly.
However, the basic reason why I have reluctantly come to the conclusion that that part of clause 10 should be omitted is the reason the Under-Secretary mentioned towards the end of her remarks. Unfortunately, the drafting of the provisions has included clause 6the foreign official bribery offencein their scope. As she said, clause 13 was carefully drafted to cover only clauses 1 and 2. When we come to clause 13, by the way, I will ask why it covers clause 2, because I cannot see why special provision should be made for receiving bribes rather than giving them. Clause 13 was carefully designed not to cover clause 6.

Oliver Heald: Double agent.

David Howarth: We will come to the examples later. It was, properly, designed not to cover clause 6. The solution that the Government have adopted with regard to clause 6 is the one that I favour for the whole Bill. In the Governments view, when it comes to a clause 6 case, there is no defence at all. As Conservative Members have been saying all day, that throws us back on prosecutorial discretion, but given that the Government have rightly accepted prosecutorial discretion as the way forward on clause 6my view is that we should fall back on it for clause 1 as wellthe only consistent thing that I can do is to support the Governments position on the removal of this provision from clause 10. It is a conclusion to which I have come reluctantly, as there is a problem and I am not satisfied with the overall way of dealing with it. Nevertheless, I will support the Governments lead amendment.

Jonathan Djanogly: I should start by recognising the upper Houses distaste at the idea of law enforcement authorities bribing unless there is a significant reason for doing so. We share that emotion. On this particular topic, unlike some of the topics that we debated earlier today, I feel that the upper House is thorough in its deliberations.
My position has also not been helped by the fact that the Government amendments arrived only last Friday. To be frank, that has not enabled me to discuss them as fully with my colleagues in the other place as I would have liked. Having said that, we will of course review carefully what the Under-Secretary has said today.
The Government amendments will remove the key intention of the other place that the Secretary of State should give the authorisation and that the authorisation should be time-limited. That is different from the much weaker proposal that the arrangements need only be those that the Secretary of State considers satisfactory. Lord Mackay of Clashfern supported Lord Pannicks amendment in the Lords:
The idea of a prior authorisation is incorporated in the statutes of the security and intelligence services.[Official Report, House of Lords, 8 February 2010; Vol. 717, c. 483.]
Many peers, including former Lord Chief Justice Woolf, asked why, if the systems can be provided for the security services to involve themselves in such things as telephone tapping, we should not be able to find an authorisation route for bribery.
That is all I will say at this stage, but we will look at the Under-Secretarys earlier comments and return to this matter at the later stages.

Claire Ward: We have responded quickly and effectively to the other places change to the authorisation scheme in the Bill. We have done all we possibly can to ensure that the need for a greater level of oversight is considered, while retaining the importance of the activities of the intelligence services and our armed services, and their ability to rely on the defence.
I am sorry that the hon. Member for Huntingdon could not find the time to discuss the amendment with his colleagues in another place when it was tabled, and come to a settled view. No doubt he will seek to discuss with them further what they wish to do from the other place. I trust that the Committee will support the amendment.

Question put and agreed to.

Clause 10, as amended, ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.(Helen Jones.)

Adjourned till Thursday 18 March at Nine oclock.